EXHIBIT 10.6
PRIVATE AND CONFIDENTIAL
SEVERANCE AND RELEASE AGREEMENT
THIS SEVERANCE AND RELEASE AGREEMENT ("Agreement") is made and entered
into as of April 1, 2005 (the "Effective Date") by and between Xxxxx X. Xxxxx
("Employee") and Xxxxxx Medical Technology, Inc. ("Company").
DEFINITIONS:
A. As used herein, the term "Employee" shall mean Xxxxx
X. Xxxxx, Employee's heirs, personal representatives,
and assigns.
B. As used herein, the term "Company" shall mean Xxxxxx
Medical Technology, Inc., its successors, assigns,
affiliates, divisions, and all of the past and
present officers, directors, employees and agents, in
their individual and representative capacities.
WHEREAS, the Employee and the Company desire to settle and resolve all
matters pertaining to Employee's employment with Xxxxxx Medical Technology, Inc.
and the termination of that employment;
NOW THEREFORE in consideration of the promises, agreements, releases
and obligations as hereinafter set forth, it is agreed by the Employee and the
Company as follows:
1. The Employee unconditionally releases the Company from any and all
causes of action and liability related to the Employee's hire, employment, and
termination of employment at Company occurring prior to and up to the effective
date of this Agreement, including, but not limited to, any breach of contract
claims, common law tort claims, claims of discrimination, claims for benefits
(including claims under the Employee Retirement Income Security Act of 1974), as
well as any claims which the Employee may have under or in connection with any
and all local, state or federal ordinances, statutes, or common law. The only
exclusion from this release is a claim that some term of this Agreement has been
violated. Company represents to Employee that as of the date of this Agreement,
it does not have or know of any claims or causes of actions which it may have
against Employee. Employee shall be entitled to indemnification by the Company
for acts arising in the course of Employee's employment in accordance with and
subject to the indemnification provisions contained in the Articles of
Incorporation and/or Bylaws of the Company as in effect from time to time.
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
Page 2
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2. Employee hereby resigns from the position of President,
International as of the Effective Date and agrees to resign as an officer of the
Company's affiliates or subsidiaries as and when requested by the Company.
Company hereby appoints Employee as Assistant to the President. The Employee's
employment with the Company will be terminated at the close of business on July
31, 2005 (the "Termination Date").
(a). While serving as Assistant to the President, Employee
shall devote his entire time, attention, and energies
to the business of the Company and shall not without
the approval of the Company, during the term of this
Agreement, be engaged in any other business activity,
regardless of whether such activity is pursued for
gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee
from investing his personal assets in businesses
which do not compete with the Company in such form or
manner as will not require any services on the part
of the Employee in the operation of the affairs of
the companies in which such investments are made and
in which his participation is solely that of an
investor, and except that the Employee may purchase
securities in any corporation whose securities are
regularly traded on NASDAQ, a national or regional
stock exchange or in the over-the-counter market
provided such purchase shall not result in his
collectively owning beneficially at any one time one
percent (1%) or more of the equity securities of any
corporation engaged in a business competitive to that
of the Company.
(b). The Employee recognizes and acknowledges that the
Company's and its predecessors' trade secrets,
know-how and proprietary processes as they may exist
from time to time are valuable, special and unique
assets of the Company's businesses, access to and
knowledge of which are essential to the performance
of the Employee's duties hereunder. The Employee will
not, during or after the term of his employment by
any of the Company, in whole or in part, disclose
such secrets, know-how or processes to any person,
firm, corporation, association or other entity for
any reason or purpose whatsoever, nor shall the
Employee make use of any such
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
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property for his own purposes or for the benefit of
any person, firm, corporation or other entity (except
the Company) under any circumstances during or after
the term of his employment, provided that after the
term of his employment these restrictions shall not
apply to such secrets, know-how and processes which
are then in the public domain (provided further that
the Employee was not responsible, directly or
indirectly, for such secrets, know-how or processes
entering the public domain without the Company's
consent).
(c). The Employee hereby sells, transfers and assigns to
the Company or to any person, or entity designated by
the Company all of the entire right, title and
interest of the Employee in and to all inventions,
ideas, disclosures and improvements, whether patented
or unpatented, and copyrightable material, made or
conceived by the Employee, solely or jointly, during
the term hereof which relate to methods, apparatus,
designs, products, processes or devices, sold,
leased, used or under consideration or development by
the Company or any of its predecessors, or which
otherwise relate to or pertain to the business,
functions or operations of the Company or any of its
predecessors or which arise from the efforts of the
Employee during the course of his employment for the
Company or any of its predecessors. The Employee
shall communicate promptly and disclose to the
Company, in such form as the Company requests, all
information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and
improvements; and the Employee shall execute and
deliver to the Company such formal transfers and
assignments and such other papers and documents as
may be necessary or required of the Employee to
permit the Company or any person or entity designated
by the Company to file and prosecute the patent
applications and, as to copyrightable material, to
obtain copyright thereof. Any invention relating to
the business of the Company and disclosed by the
Employee within one year following the Termination
Date shall be deemed to fall within the provisions of
this paragraph unless proved to
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
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have been first conceived and made following such
termination.
(d). (i) During the term of Employee's employment, and
for a period ending twelve (12) months from and after
the termination of the Employee's employment
hereunder, the Employee shall not (whether as an
officer, director, owner, employee, partner or other
direct or indirect participant) engage in any
Competitive Business. "Competitive Business" shall
mean the manufacturing, supplying, producing,
selling, distributing or providing for sale of any
orthopaedic product, device or instrument
manufactured or sold by the Company or its
subsidiaries or in clinical development sponsored by
the Company or its subsidiaries, in each case, as of
the date of termination of the Employee's employment.
For such period, the Employee shall also not
interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the
Company or its subsidiaries and any customer,
supplier, lessor, lessee or employee of the Company
or its subsidiaries. It is the intent of the parties
that the agreement set forth in this paragraph 2(d)
apply in all parts of the world.
(ii) Employee agrees that a monetary remedy
for a breach of the agreement set forth in this
paragraph 2 and paragraphs 5 and 6 will be inadequate
and impracticable and further agrees that such a
breach would cause the Company irreparable harm, and
that the Company shall be entitled to temporary and
permanent injunctive relief without the necessity of
proving actual damages. In the event of such a
breach, Employee agrees that the Company shall be
entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions
and permanent injunctions as a court of competent
jurisdiction shall determine. Furthermore, Company
may seek such injunctive relief through courts of
competent jurisdiction notwithstanding the
alternative dispute resolution procedure set forth in
paragraph 9. In addition to any other legal and
equitable relief to which the Company may be
entitled, Employee agrees to pay Company liquidated
damages in the
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
Page 5
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amount equal to two times the value of all
compensation and benefits that could be provided to
Employee hereunder in the event the Employee breaches
their obligations set forth herein.
(iii) It is the desire and intent of the
parties that the provisions of this paragraph 2(d)
shall be enforced to the fullest extent permissible
under the laws and public policies applied in each
jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this
paragraph 2(d) shall be adjudicated to be invalid or
unenforceable, this paragraph 2(d) shall be deemed
curtailed, whether as to time or location, to the
minimum extent required for its validity under the
applicable law and shall be binding and enforceable
with respect to the Employee as so curtailed, such
curtailment to apply only with respect to the
operation of this paragraph in the particular
jurisdiction in which such adjudication is made. If a
court in any jurisdiction, in adjudicating the
validity of this paragraph 2(d), imposes any
additional terms or restrictions which respect to the
agreement set forth in this paragraph 2(d) this
paragraph 2(d) shall be deemed amended to incorporate
such additional terms or restrictions.
(iv) If there is a breach or threatened
breach of the provisions of paragraphs 2, 5, or 6 of
this Agreement, the Company shall be entitled to an
injunction restraining the Employee from such breach.
Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies for such
breach or threatened breach.
3. The Employee certifies that this Agreement is fully understood by
Employee, is entirely satisfactory to Employee, and that Employee's signing of
this Agreement is Employee's own free and informed act and deed and that
Employee has been given the opportunity to discuss it with counsel of Employee's
choosing.
4. The Employee acknowledges that he is currently able to work in his
current position without limitations, either physical or mental and without any
accommodation for any physical or mental ailment.
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
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5. To the extent permitted by law, the Employee and the Company agree
each will maintain the strictest secrecy and will not disclose the terms of this
Agreement to any agency or person except where disclosure is compelled pursuant
to legal process or for reporting purposes to Federal, State, or local taxing
authorities, or in discussions with legal and financial advisors and employee's
immediate family members.
6. The Employee further agrees not to disclose to any person any
matters relating to the confidential business affairs of the Company or the
confidential business affairs or the personal affairs of any officer, director
or employee of the Company, or to take any action or make any written or oral
statement at any time which could tend, in the sole discretion of the Company,
to disparage, demean or embarrass the Company, or its subsidiaries, divisions,
officers, directors or employees.
7. The Employee further agrees to execute Exhibit A, which releases the
Company from any and all liabilities under the Age Discrimination in Employment
Act.
8. The Employee agrees to cooperate with the Company during and after
the Severance period by providing information, in response to any reasonable
request, relative to the Employee's duties performed heretofore. The person
through whom this information shall be requested will be the Employee's direct
report as the date of this agreement, or their designee. Furthermore, during and
after the term of this Agreement, Employee agrees to cooperate with the Company
in connection with any investigations or the conduct of any litigation at the
Company's expense.
9. This Agreement, and any dispute arising in connection with its
operation or execution, shall be construed in accordance with and governed by
the statutes and common law of the State of Tennessee and shall be resolved by
binding arbitration in Memphis, Tennessee. Each party to this Agreement will
select one arbiter. The two arbiters so selected shall then select a third.
Decisions of the arbitration panel shall be binding upon the parties hereto. The
prevailing party shall be entitled to have all expenses, including, but not
limited to, attorney fees and any fees submitted by the arbitrators to be paid
by the non-prevailing party.
10. This Agreement reflects the entire agreement of the parties
relative to the subject matter hereof and supersedes all prior or
contemporaneous oral or written understandings, statements, representations or
promises, including the Employment Agreement between the parties dated February
8, 2005. The Confidentiality and Inventions Agreement between the parties
remains in full force and effect.
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
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11. The parties agree that each provision of this Agreement is
severable and further agree that if any term or provision is held to be invalid,
void, or unenforceable by a court of competent jurisdiction or an administrative
agency for any reason whatsoever, such ruling shall not affect the validity of
the remainder of this Agreement.
12. In exchange for this agreement, ADEA Release and Agreement attached
as Exhibit A the Company will provide pay and benefits as follows:
(a). Company shall provide Employee with a leave of
absence from the Effective Date until the Termination
Date during which time Company shall continue to pay
Employee his base salary, benefits, and car allowance
as of the Effective Date. Employee's 2005 vacation,
and any carryover vacation from the previous year,
will be credited against the leave period. Employee
shall not be entitled to any bonus payments.
(b). Beginning August 1, 2005 and continuing until
December 31, 2005, Company shall pay Employee
severance pay equal to Employee's current
semi-monthly base salary in accordance with the
Company's normal payroll practices. On December 31,
2005, Company shall pay Employee a lump sum equal to
an amount of the Employee's current monthly base
salary for seven (7) months. The period from August
1, 2005 through July 31, 2006 shall be known as the
Severance Period. There will be no payment for a car
allowance, or any bonus, or any other benefits during
the Severance Period.
(c). Professional outplacement services provided by
Xxxxxxx, Xxxxxxxxxx & Associates at the senior
executive level.
(d). COBRA paid group medical, dental, and vision plan
coverage during the time the employee is receiving
severance pay (the Severance Period").
(e). The attorney's fee for review of the release
agreement of up to, but not to exceed $200.
(f). Any stock options you have are governed by the
specific stock option agreement and
Severance and Release Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
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the applicable stock option plan. This Agreement does
not supersede those stock related agreements. The
following points generally apply to your options: (1)
options that have not yet vested at the time of
termination shall expire and no further vesting shall
occur with respect to those options; (2) vested
options remain exercisable until the earlier of the
Expiration Date or the date that is ninety (90) days
after termination if the termination is without
cause; (3) if the termination is voluntary, other
than for reasons of disability or retirement, or if
the termination is for cause, then all of the
options, to the extent not exercised prior to
termination, whether exercisable or not, shall
immediately lapse and be cancelled. Check your stock
option agreement and the applicable stock option plan
for the specific terms that apply to your stock
options.
THE EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE READ THIS SEVERANCE AND RELEASE
AGREEMENT, THAT EMPLOYEE UNDERSTANDS ALL OF ITS TERMS AND EXECUTES IT
VOLUNTARILY AND WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND THE CONSEQUENCES
THEREOF.
AGREED AND ACCEPTED as of the Effective Date.
EMPLOYEE: XXXXXX MEDICAL TECHNOLOGY, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxx
-------------------------------- ------------------------------
Xxxxx X. Xxxxx 4/21/05 Xxxxx X. Xxxx, Vice President
Title: General Counsel and Secretary
------------------------------
Apr 22 2005
PRIVATE AND CONFIDENTIAL
EXHIBIT A
ADEA RELEASE AND AGREEMENT
As a material inducement to Xxxxxx Medical Technology, Inc.
(hereinafter referred to as "Xxxxxx" or "Employer") to enter into this ADEA
Release and Agreement (the "Release or "Agreement") with Xxxxx X. Xxxxx
(hereinafter referred to as "Employee") (for Employee, Employee's heirs,
executors, administrators and assigns), Employee hereby unconditionally releases
and forever discharges Xxxxxx and each of the Xxxxxx'x stockholders,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, attorneys, divisions, subsidiaries, affiliates and all persons
acting by, through, under, or in concert with any of them from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorney's fees and costs actually
incurred) of any nature whatsoever, known or unknown, suspected or unsuspected,
including, but not limited to, rights, under the Age Discrimination in
Employment Act of 1967, as amended from time to time, and other federal, state,
or local laws prohibiting discrimination, any claims the employee may have with
regard to Employee's hiring, employment, or electing the re-employment program
and termination of employment claims growing out of any legal restrictions on
Xxxxxx'x right to terminate its employees ("Claim" or Claims"), which the
Employee now has, owns or holds, or claims to have owned or held, or which the
Employee at any time hereinafter may have owned or held or claimed to have owned
or held against Xxxxxx.
To comply with the Older Workers Benefit Protection Act of 1990, as
amended from time to time, the Release and Agreement has advised Employee of the
legal requirements of this Act and fully incorporates the legal requirements by
reference into this Agreement as follows:
a. This Agreement is written in xxxxxx'x terms, and the Employee
understands and comprehends its terms;
b. Employee has been advised of Employee's rights to consult an
attorney to review the Agreement;
c. Employee does not waive any rights or claims that may arise
after the date the Release is executed;
d. Employee is receiving consideration beyond anything of value
to which he already is entitled;
e. Employee has been given a reasonable period of time to
consider this Agreement.
As consideration for this Release, Xxxxxx agrees to provide the items
listed previously in paragraph 12 of the Severance and Release Agreement dated
April 1, 2005. The Employee enters into this Release with full knowledge of its
contents and enters into this Agreement voluntarily.
ADEA Release and Agreement PRIVATE AND CONFIDENTIAL
April 1, 2005
Page 2
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AGREED AND ACCEPTED
EMPLOYEE: XXXXXX MEDICAL TECHNOLOGY, INC.
I acknowledge that I fully understand
and agree that this Agreement may be
pleaded by Xxxxxx Medical Technology,
Inc. as a complete defense to any claim
which hereafter may be asserted by me
or a claim against Xxxxxx Medical
Technology, Inc. for or on account of
any matter or thing whatsoever arising
out of the employment relationship or
my termination from active employment.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxx
------------------------------------- -----------------------------
Xxxxx X. Xxxxx 4/21/05 Xxxxx X. Xxxx, Vice President
Title: General Counsel and Secretary
SWORN TO AND SUBSCRIBED, before me, a SWORN TO AND SUBSCRIBED, before me,
Notary Public, in my presence this a Notary Public, in my presence this
21 day of April, 2005 22nd day of April, 2005
/s/ Xxx Xxxxxx /s/ Xxxxxxx Xxxxxxxx
--------------------------- ---------------------------
Notary Public Notary Public
County of Xxxxxx Xxxxxx County
------ Tennesse
State of Tennessee
---------
My Commission Expires: 1-18-09 My Commission Expires: 1/15/08
------------ ------------
[SEAL] [SEAL]
NOTE: EMPLOYEE IS HEREBY ADVISED OF THEIR RIGHT TO RESCIND AND NULLIFY THIS
AGREEMENT, WHICH RIGHT MUST BE EXERCISED, IF AT ALL, WITHIN SEVEN (7) DAYS OF
THE DATE OF EMPLOYEE'S SIGNATURE. EMPLOYEE MUST REVOKE RELEASE BY LETTER TO
XXXXXX MEDICAL TECHNOLOGY, INC., ATTENTION: GENERAL COUNSEL, 0000 XXXXXXX XXXX,
XXXXXXXXX, XX 00000, WITHIN SEVEN (7) DAYS. NO CONSIDERATION SHALL BE CONVEYED
UNTIL SUCH TIME PERIOD HAS EXPIRED.
