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EXHIBIT 10(m)
FIRST AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
(Xxxxxx Xxxxx)
This FIRST AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
("Agreement"), dated as of October 15, 1996, is made and entered into by and
between ErgoBilt, Inc., a Texas corporation ("Company"), and Xxxxxx Xxxxx, an
individual ("Executive"). This Agreement supersedes in its entirety that
certain Executive Employment Agreement dated as of August 15, 1996 (the
"Original Agreement"), executed between the parties.
W I T N E S S E T H:
WHEREAS, BodyBilt Seating, Inc. ("BBSI") is engaged in manufacturing,
marketing and selling ergonomically-correct chairs; and
WHEREAS, Company and its wholly-owned subsidiary, EB Subsidiary, Inc., a
Texas corporation ("Surviving Subsidiary"), have entered into that certain
Agreement and Plan of Merger dated as of August 14, 1996 (the "Merger
Agreement"), pursuant to which Surviving Subsidiary will merge with BBSI (the
"Merger"), with Surviving Subsidiary surviving under the name of "BodyBilt
Seating, Inc.;" and
WHEREAS, Company intends to continue to operate Surviving Subsidiary and
to acquire other businesses and assets compatible with or complementary to the
business of Surviving Subsidiary and Company; and
WHEREAS, Executive has represented to Company that he has substantial
experience, skills and expertise in managing and operating a variety of
businesses; and
WHEREAS, Company desires to employ Executive on a full-time basis as
President and Chief Executive Officer upon completion of an initial public
offering of the securities of Company (the "IPO") and the merger, and on a
part-time basis prior thereto; and
WHEREAS, pursuant to the Original Agreement, Executive agreed to provide
such services and take on such responsibilities for the consideration set forth
therein; and
WHEREAS, the Original Agreement was amended and restated as of October
15, 1996; and
WHEREAS, the parties desire to further amend and restate the Original
Agreement.
NOW, THEREFORE, the parties, for and in consideration of the mutual
promises herein contained, agree as follows:
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ARTICLE I
Employment
1.1 General Scope of Employment. Commencing as of August 15, 1996
(the "Commencement Date"), Company will be deemed to have employed Executive as
the President and Chief Executive Officer ("CEO") of Company. As soon as
possible after the Commencement Date, Executive will also be deemed to have
commenced to serve as a member of the Board of Directors of Company ("Company's
Board"), President and CEO of Subsidiary and a member of Subsidiary's Board of
Directors and such other boards of directors of companies acquired by Company
from time to time. Executive's employment will be on the terms of and subject
to the conditions of this Agreement. Executive will report directly to
Company's Board and will perform the principal duties and responsibilities set
forth in Section 1.2 below and such additional duties and responsibilities,
consistent with his professional experience, as may reasonably be assigned to
him from time to time by Company's Board. Executive hereby accepts such
employment and agrees to devote his full time and energy to Company's business
as will be necessary to perform his duties and responsibilities in a faithful
and competent manner.
1.2 Principal Duties and Responsibilities.
1.2.1 General. As President and CEO of Company, Executive will
have the general charge of the business affairs and properties of Company and
will be fully responsible for the general management and supervision of its
other officers, employees, agents and representatives except as otherwise
provided by the bylaws or the agreements of Company. Executive will perform
all duties incident to the offices of President/CEO, and will see that all
orders and resolutions of the Board are carried into effect.
1.2.2 Pre-IPO Closing. Prior to the "Closing" under the Merger
Agreement (as defined therein), Executive will serve to facilitate the general
organization of Company and assist in the development of general business
plans.
1.2.3 Post-IPO Closing. After the Closing under the Merger
Agreement, during the term of this Agreement, Executive's principal duties and
responsibilities will be to: (i) generate results in accordance with the
reasonable direction of the Board of Directors that will, among other things,
maximize the value of the outstanding stock of Company; (ii) develop and
implement, execute and carry out business plans as and when approved by the
Board; (iii) hire and manage all key executive personnel of Company; (iv)
develop, implement and oversee employee benefit programs; (v) promote
nationally and internationally the business of Company; (vi) review and comment
on all material contracts concerning Company; (vii) review and comment on all
strategic and operational plans; (viii) review and comment on all financial and
tax planning for Company; (ix) identify and pursue new business opportunities
compatible with and complementary to the businesses of Company; and (x) such
other duties and responsibilities necessary to integrate and coordinate the
activities of Company into an overall investment and management philosophy.
1.3 Extent of Services.
1.3.1 Pre-IPO Closing. Prior to Closing under the Merger
Agreement, Executive will serve on a part-time basis, rendering services as
needed and as reasonably necessary to perform his duties and responsibilities.
Until such Closing, Executive may not engage in other business activities
competitive
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with the business of Company.
1.3.2 Post-IPO Closing. After Closing under the Merger
Agreement, Executive will devote all of his time, attention and energy to
Company's business and will not engage in any other business or consulting
activity for gain, profit or other pecuniary advantage except as expressly
provided in this Agreement.
1.3.3 Passive Investments Permissible. Nothing hereinabove is
intended to prevent Executive from making personal passive investments in other
business activities not directly or indirectly competitive with the business of
Company.
1.4 Outside Board Activities. Subject to the conditions hereinafter
set forth, after the Closing under the Merger Agreement, Executive may, upon
prior notice to Company's Board, serve as a member of no more than three (3)
boards of directors, boards of trustees or other governing bodies of "for
profit" companies and/or "non-profit" civic, cultural, educational and/or
charitable organizations, provided that in all cases: (i) such company or
organization is not directly or indirectly engaged in a business or does not
support a business that is competitive, directly or indirectly, with the
business of Company, and (ii) such service does not interfere with Executive's
ability to perform his duties and responsibilities to Company.
1.5 Outside Income. After the Closing under the Merger Agreement,
absent Company's Board's written consent, all fees, compensation and other
income (collectively "Outside Income") received by Executive while employed by
Company from any source other than personal gifts, inheritance, or passive
investments, including, but not limited to, all fees for teaching, speaking
engagements, acting as an officer, director, trustee, receiver, executor,
administrator or other fiduciary (other than as a trustee, executor or
administrator of a trust or estate of Executive or a member of his family) will
be the property of Company and will be immediately disclosed and remitted to
Company.
1.6 Directors and Officers Liability Insurance. After the Closing
under the Merger Agreement, Company will take out and maintain, if commercially
reasonable, directors and officers liability insurance for the benefit of the
members of Company's Board and the officers of Company in such amounts deemed
necessary and/or appropriate by Company's Board. In the event such insurance
is not obtained, then Company will indemnify Executive as provided in the
bylaws of Company to the fullest extent permitted under applicable law.
ARTICLE II
Term
Executive's employment will be for an initial term ("Term") commencing
as of August 15, 1996 (the "Commencement Date") and terminating three (3) years
after the Closing under the Merger Agreement.
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ARTICLE III
Annual Base Salary and Miscellaneous Benefits
3.1 Annual Base Salary.
3.1.1 Pre-IPO Closing Annual Base Salary. Commencing on the
Commencement Date and for such period ending on the first to occur of either
the Closing under the Merger Agreement or March 20, 1997, Company will pay to
Executive Annual Base Salary of Sixty Thousand Dollars ($60,000.00), payable in
monthly installments of Five Thousand Dollars ($5,000.00). Such Annual Base
Salary will be due and payable on the last day of each calendar month for
services rendered during such month. Annual Base Salary for any partial month
of services will be prorated on the basis of a thirty (30) day month.
3.1.2 Post-IPO Funding Annual Base Salary. Commencing on the
earlier of March 20, 1997 or the Closing under the Merger Agreement, as
compensation for all duties and services to be rendered by Executive hereunder
to Company, Company will pay to Executive an Annual Base Salary of One Hundred
Twenty-Five Thousand Dollars ($125,000.00) for each twelve-month period of the
Term. Annual Base Salary will be paid in twelve (12) equal monthly
installments, payable in accordance with Company's customary payroll policy in
effect at the time such payment is made, or as may otherwise be mutually agreed
upon in writing by the parties. Annual Base Salary for services rendered for a
partial month will be prorated based on a thirty (30) day month.
3.2 Performance Incentive Plan. It is the intent of the parties that
Company adopt as soon as reasonably possible such bonus and/or incentive plans,
stock option plans and such other plans adopted by Company from time to time to
provide incentive or additional compensation to its senior executives ("Senior
Management Incentive Plans"). Such Senior Management Incentive Plans will be
adopted on such terms and conditions deemed to be in the best interests of
Company and may provide for awards in the form of cash, equity or other
benefits. Executive will be eligible to become a named participant to such
Senior Management Incentive Plans. It is the further intention of the parties
that said Senior Management Incentive Plans provide for awards to participants
based on the achievement of various specified metrics and milestones
established in the business plans for the business adopted and approved by
Company's Board on behalf of Company, as amended from time to time, and based
further on the overall profitability of the business, the participants'
performances, the general financial condition of Company, and other such
factors as Company's Board may deem relevant. Such Senior Management Incentive
Plans will be adopted on such terms and conditions deemed to be in the best
interests of Company and may provide for awards in the form of cash, equity or
other benefits.
3.3 Expenses. During the term of his employment hereunder, Executive
will be entitled to incur reasonable business expenses ("Business Expenses") in
performing his services hereunder, including transportation, entertainment,
travel, professional dues, professional periodicals and business promotion.
All Business Expenses will be reimbursed by Company upon presentation of
receipts or other documentation establishing the nature of the expense, the
time-date-place incurred and the business reason for such Business Expense.
Company will not have any obligation to reimburse any Business Expense not
presented for reimbursement within ninety (90) days of the date on which such
Business Expense was incurred.
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3.4 Vacation and Sick Days.
3.4.1 Executive will be entitled to twenty (20) business days of
paid vacation per year (which need not be taken consecutively and, during the
first twelve-month period after the closing of the Merger, will not be taken
consecutively). Such vacation will be scheduled to minimize interference with
the business. Executive will also be entitled to all paid holidays given by
Company to its employees.
3.4.2 Executive will be entitled to not more than five (5) days
paid sick days per year.
3.4.3 Vacation and sick day benefits must be taken in the year
in which they accrue and may not be taken in any subsequent year absent the
consent of Company's Board, nor may Executive request payment of the cash
equivalent of accrued vacation or sick days not taken.
3.5 Other Benefits. Company will provide to Executive the following
additional benefits:
3.5.1 Miscellaneous Benefits. Executive will be entitled to
participate in Company major medical and/or dental plans, life insurance
programs, accidental death and dismemberment insurance, retirement benefits,
disability benefits, any other insurance programs provided by Company and any
other benefit programs hereafter adopted by Company consistent with Company
policies, if and when adopted from time to time.
3.5.2 Medical/Dental Benefits. Company will pay for all
premiums for Executive, his spouse and children to obtain full benefits
provided under Company's major medical and dental plans as and when obtained.
Company will also pay for all costs and expenses not otherwise covered by
insurance for an annual general physical for Executive.
3.5.3 ERISA Plans. Executive will have the right to participate
in any plans providing deferred compensation benefits as and when adopted by
Company under the various provisions of the Employee Retirement Income Security
Act ("ERISA"), as amended from time to time.
3.5.4 Company Car. Consistent with Company policies as adopted
from time to time, Executive will be provided a "Company Car" for his use
during the term of this Agreement. Company will pay or reimburse Executive for
all "Company Car Expenses." Company Car Expenses will include: (i) insurance;
(ii) gas, regular servicing, maintenance and repairs (unless caused by
Executive's own negligence, mistreatment or misuse of the Company Car, or from
Executive's own misconduct); and (iii) all lease or debt service payments on
such Company Car. Executive will be responsible for all personal costs and
expenses associated with any personal use of the Company Car. All Company Car
Expenses will be reimbursed and payable consistent with the provisions of
Section 3.3 above. In the event that Company adopts a "car allowance" policy,
Executive's monthly allowance will be approximately Five Hundred and No/100
Dollars ($500.00), provided such sum is reasonably comparable to that being
provided similar executives and managers of Company.
ARTICLE IV
Inventions, Competition and Confidentiality
4.1 Inventions. All designs, discoveries, improvements and
inventions (collectively, "Inventions"), whether patentable or unpatentable,
whether copyrightable or uncopyrightable, whether of
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a business or technical nature, made or conceived by Executive alone or with
others, during the Term of this Agreement will be owned exclusively by Company
whether or not such Inventions are along the lines of the actual or anticipated
business, work, research or investigations of Company or which result from or
are suggested by any work done for Company or which relate to Company's
business. Executive will promptly disclose such Inventions to Company. In
addition, Executive will perform all actions (without any expense to Executive)
reasonably requested by Company to establish and confirm such ownership
including, but not limited to, assigning to Company, without additional
compensation, the entire worldwide rights to such Inventions, signing all
necessary papers, instruments and other documents and giving sworn testimony in
support thereof.
4.2 Non-Competition. Executive covenants and agrees with Company
that, except as otherwise consented to, approved or permitted in writing by
Company's Board, at any time while employed as an executive employee of Company
and for a period of two (2) years after the termination of Executive's
employment hereunder, Executive will not, directly or indirectly, whether as an
officer, director, employee, independent contractor, or whether acting alone or
as a member of a partnership, joint venture or as a holder or investor in any
security or other financial interest of any corporation or other business
entity, engage in any "Competitive Activity" as defined herein. For the
purposes of this Agreement, "Competitive Activity" will mean:
(a) the solicitation of any customers or potential customers
of Company to purchase any products or services in direct competition
with the products and services provided by Company;
(b) requesting any actual or prospective customer or supplier
of Company to curtail or cancel their business with Company;
(c) except as provided by law or in any other contract or
agreement of even date herewith executed and delivered pursuant hereto,
the disclosure to any person, firm or corporation of any details of the
organization, business affairs, intellectual property or technology of
Company; or
(d) any action designed to induce or attempt to influence any
employee of Company to terminate his or her employment with Company or
employ or assist anyone else in the employment of any of the employees
of Company.
The restrictions of this section will apply only to the metropolitan
areas where Company was conducting business as of the Termination Date.
Competitive Activity will not include Executive's mere ownership of securities
in any publicly-traded company in which Executive holds or controls less than
five percent (5%) of the issued and outstanding securities.
The parties agree that the duration and geographic scope of the
non-competition provision set forth in this section are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the parties agree that the provision will remain in full force and effect for
the greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this non-competition provision will be
deemed to be a series of separate covenants, one for each and every county of
each and every state of the United States of America and each and every
political subdivision of each and every country outside the
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United States of America where this provision is intended to be effective.
Executive agrees that damages are an inadequate remedy for any breach of this
provision and that Company will, whether or not it is pursuing any potential
remedies at law, be entitled to equitable relief in the form of preliminary and
permanent injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision.
4.3 Non-Disclosure. Executive will execute and deliver,
contemporaneous with the execution and delivery of this Agreement, Company's
standard form Non-Disclosure Agreement in the form attached hereto as Exhibit
4.3.
4.4 Enforcement. Executive and Company further agree and acknowledge
that Company does not have an adequate remedy at law for the breach or
threatened breach by Executive of the covenants and agreements set forth in
Sections 4.2, 4.3 and the Non-Disclosure Agreement executed pursuant to Section
4.3 above. Accordingly, Executive further agrees that Company may, in addition
to the other remedies which may be available to it hereunder, file suit in
equity to enjoin Executive from such breach or threatened breach.
4.5 Disclosure of Competitive Investments. To the best of
Executive's knowledge, Executive does not own or hold directly, indirectly or
beneficially any investments competitive with the business of Company. In the
event that Company determines that Executive holds a material interest in a
competitive investment, Company may require Executive to divest himself of such
investment unless such interest is held in a publicly-traded mutual fund in
which Executive holds less than five percent (5%) of the issued and outstanding
shares or is held in a portfolio account over which Executive has no power to
exercise any investment or management decisions.
ARTICLE V
Termination
5.1 Termination by Company Upon Executive's Death or Disability.
Company has the right to terminate this Agreement and Executive's employment
hereunder in the event of Executive's death or disability as provided below.
5.1.1 Death. If Executive dies during the Term of this
Agreement, then this Agreement will terminate immediately effective on the date
of Executive's death ("Termination Date"), without notice.
5.1.2 Disability. If, during the term of this Agreement,
Company's Board reasonably determines that Executive has become physically or
mentally disabled, whether totally or partially, so that he is prevented from
performing fully his usual duties and services hereunder, Company may provide
written notice to Executive and terminate Executive's employment hereunder,
effective on such date specified in such notice (also "Termination Date").
"Disability" will mean Executive's permanent disability to perform the duties
and responsibilities required hereunder as determined by a licensed physician
selected by Company's Board in consultation with Executive's personal
physicians.
5.1.3 Payment of Compensation and Other Benefits on Death or
Disability. In the event of the termination of this Agreement by reason of
Executive's death or disability, Executive (or his estate) will be entitled to
payment of amounts due under this Agreement as follows:
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(i) Annual Base Salary. Company will pay in full and complete
satisfaction of amounts due under Section 5.2 as Annual Base Salary: (i)
upon death, Annual Base Salary through the last day of the calendar
month in which the applicable Termination Date occurs; and (ii) upon
disability, Annual Base Salary equal to the immediately succeeding six
(6) monthly payments from the last day of the calendar month in which
the applicable Termination Date occurs, less any monthly disability
payments for such period which could be claimed.
(ii) Incentive Plan and Bonus Compensation. Any amounts
awarded to Executive but unpaid under any Senior Management Incentive
Plan or as bonus compensation under Section 3.2 of this Agreement will
be paid by Company to Executive (or his estate) within twelve (12) full
calendar months of the applicable Termination Date or as otherwise
specified in such Senior Management Incentive Plan or award of bonus
compensation.
(iii) Employee Benefit Plans. Executive (or his estate) will be
entitled to receive all other benefits provided to employees of Company
as set forth in any employee benefit plans in effect as of the
applicable Termination Date in which Executive was a qualified
participant.
5.2 Termination by Company for Due Cause.
5.2.1 Due Cause. In addition to the right of termination set
forth in Section 5.1, Company will have the right to terminate this Agreement
and Executive's employment hereunder only for "Due Cause" upon written notice
to Executive, effective upon such date specified in such notice (also
"Termination Date"). Executive will not be deemed to have been terminated
prior to the expiration of the Term hereof for "Due Cause" unless and until
Company delivers to Executive a copy of a resolution duly adopted by Company's
Board (exclusive of Executive's vote) at a meeting of Company's Board duly
called and held for such purpose (after thirty days' notice to Executive and an
opportunity for Executive, together with his one or more advisors, to be
heard), finding that, in the good faith opinion of Company's Board, Executive
committed an act or omission set forth below in this Section 5.2.1 and
specifying the particulars thereof in detail. Nothing herein will limit the
right of Executive to present his position to the Board prior to such
termination.
"Due Cause" will mean that Executive has:
(i) committed an intentional act of fraud, embezzlement or
theft in connection with his duties or in the course of his employment
with Company;
(ii) pled guilty or nolo contendere to, or is convicted of, a
felony, whether or not related to his duties or in the course of his
employment;
(iii) knowingly, wilfully and wrongfully disclosed "Confidential
Information" of Company as defined in the Non-Disclosure Agreement
executed by Executive pursuant to Section 4.3;
(iv) knowingly, wilfully and wrongfully engaged in any
Competitive Activity as defined in Section 4.2 above;
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(v) engaged in misconduct or in conduct contrary to written
directions of Company's Board that materially injures Company's
financial or other interests;
(vi) knowingly, wilfully and wrongfully breached any material
provision of this Agreement;
(vii) knowingly, wilfully and wrongfully violated any federal,
state or local governmental policies, plans or procedures governing the
workplace environment (e.g., EEOC, Title VII, Texas Workers Compensation
Act or Wage/Salary/Benefits policies or procedures) or any such
policies, plans or procedures developed by Company or its subsidiaries
with respect to Company's desire to operate a professional working
environment;
(viii) knowingly, wilfully and wrongfully engaged in any
unprofessional conduct unbecoming a senior executive of Company or
comparable businesses after written notice of such conduct and
Executive's subsequent failure to cease and desist;
(ix) materially failed to perform any of his principal duties
and responsibilities specified in Section 1.2 of this Agreement and such
failure continues for a period of 30 days after written notice to
Executive by the Board of Directors of the existence of such failure,
or, if such failure is not of such nature that it can be cured within 30
days, Executive has commenced reasonable and diligent efforts to cure
said failure.
5.2.2 Effect on Compensation and Benefits. In the event of the
termination of Executive's employment by Company under Section 5.2.1 above,
Company will pay to Executive as "Liquidated Damages" by certified check or by
wire transfer the following amounts in cash no less than five (5) business days
after the effective date of such termination: (i) an amount equal to six (6)
months' installments of Executive's Annual Base Salary payable under Section
4.2, and (ii) Executive will also be entitled to receive only any unpaid
amounts awarded to Executive under a Senior Management Incentive Plan under
Section 3.2 and any rights and benefits Executive may have under employee
benefit plans in accordance with the terms of such plans and programs. In
addition, upon such termination, and notwithstanding the terms of any employee
benefit plans or programs to the contrary, Company will continue to provide to
Executive and his family at no cost to Executive full major medical, dental and
disability benefits for the one-year period commencing after the effective date
of termination, which benefits will be of the same nature as received by
Executive immediately prior to his termination.
Termination of Executive's employment pursuant to Section 5.2.1 will not
affect Executive's obligations and undertakings in the last sentence of Section
4.1 and in Section 4.2 hereof or under the Non-Disclosure Agreement executed
pursuant to Section 4.3.
5.3 Executive's Right of Termination on Company's Breach. Executive
will have the right upon no less than sixty (60) days prior written notice to
terminate this Agreement and his employment hereunder in the event of Company's
breach of any material provision of this Agreement. Such notice will state the
nature and scope of such breach in detail and identify the specific relevant
provisions of this Agreement breached. Company will have thirty (30) days
within which to cure such breach or, if such breach is not of such nature that
it can be cured within thirty (30) days, Company has commenced reasonable and
diligent efforts to cure said breach. If Company does not cure or commence to
cure the
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specific breach within the thirty-day period, then, upon confirming written
notice from Executive, this Agreement will terminate on the date specified in
Executive's original notice (also "Termination Date"). In the event of
termination pursuant to this Section 5.3, XxXxxxxx may purchase all of
Executive's Shares less that number of Executive's Shares with a total value
equal to One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) based
on the price per share of common stock in Company's IPO, and Executive will
fully comply with all of the covenants and agreements set forth in Sections 5.7
and 5.8 hereof.
5.4 Breach of Agreements. Executive acknowledges that a material
part of the inducement for Company to enter into this Agreement is Executive's
covenant with respect to performance, continued employment, non-competition,
non-disclosure, non-cooperation and non-solicitation, all as set forth in
Articles IV and V hereof. Executive agrees that if Executive breaches any of
those covenants, Company will have no further obligation to pay Executive any
amounts or benefits otherwise payable hereunder (except as may otherwise be
required at law) and will be entitled to such other legal and equitable relief
as a court of arbitrator will reasonably determine unless such breach is an
inadvertent breach that does not result in any material harm to Company.
5.5 XxXxxxxx'x Right to Purchase Executive's Shares in Company.
5.5.1 XxXxxxxx'x Purchase Rights on Termination for Cause. In
the event Company terminates Executive's employment pursuant to Section 5.2,
Xxxxxx XxXxxxxx ("XxXxxxxx") will have the right to purchase from Executive a
portion of the shares of Company owned or controlled by Executive ("Executive's
Shares"), at the same price per share that Executive purchased the initial
Executive's Shares from XxXxxxxx, plus an additional amount equal to interest
at an annual percentage rate of seven and one-half percent (7.5%) from and
after the date of the Executive's purchase of the initial Executive's Shares:
(i) If the effective date of Executive's termination is
on or prior to the first anniversary of the closing of the
Merger, then XxXxxxxx may purchase all of Executive's Shares less
that number of Executive's Shares with a total value equal to One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00)
based on the price per share of common stock in Company's IPO;
(ii) If the effective date of Executive's termination is
on or before the second anniversary but after the first
anniversary of the closing of the Merger, and provided that the
value of Executive's Shares to be retained by Executive is not
less than the amount specified in Section 5.5.1(i) above, then
XxXxxxxx may purchase a total of sixty-six and sixty-six one-
hundredths percent (66.66%) of Executive's Shares, provided that
the number of shares retained by Executive will not be less than
the number of shares that Executive is entitled to retain
pursuant to Section 5.5.1(i); or
(iii) If the effective date of Executive's termination is
at any time after the second anniversary but prior to the third
anniversary of the closing of the Merger, then XxXxxxxx may
purchase a total of fifteen percent (15%) of Executive's Shares,
provided that the number of shares retained by Executive will not
be less than the aggregate number of shares that Executive is
entitled to retain pursuant to Sections 5.5.1(i) and (ii).
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5.5.2 XxXxxxxx'x Purchase Rights on Executive's Voluntary
Resignation. In the event Executive voluntarily resigns his employment with
Company, XxXxxxxx will have the right to purchase from Executive a portion of
Executive's Shares at the same price per share Executive purchased the initial
Executive's Shares from XxXxxxxx, plus an additional amount equal to interest
at an annual percentage rate of seven and one-half percent (7.5%) from and
after the date of Executive's purchase of the initial Executive's Shares:
(i) If the effective date of Executive's voluntary
resignation is on or prior to the first anniversary of the
closing of the Merger, then XxXxxxxx may purchase all of
Executive's Shares less that number of Executive's Shares with a
total value equal to Five Hundred Thousand Dollars ($500,000.00)
based on the price per share of common stock in Company's IPO;
(ii) If the effective date of Executive's voluntary
resignation is on or before the second anniversary but after the
first anniversary of the closing of the Merger, then XxXxxxxx may
purchase a total of sixty-six and sixty-six one-hundredths
percent (66.66%) of Executive's Shares, provided that the number
of shares retained by Executive will not be less than the number
of shares that Executive is entitled to retain pursuant to
Section 5.5.2(i); or
(iii) If the effective date of Executive's voluntary
resignation is at any time after the second anniversary but prior
to the third anniversary of the closing of the Merger, then
XxXxxxxx may purchase a total of fifteen percent (15%) of
Executive's Shares, provided that the number of shares retained
by Executive will not be less than the aggregate number of shares
that Executive is entitled to retain pursuant to Sections
5.5.2(i) and (ii).
5.5.3 Executive's Shares. For the purposes of this Section 5.5,
any shares of Company held in trust for the benefit of Executive's children
will be deemed to be controlled by Executive and included as part of
Executive's Shares.
5.5.4 Company's Right of Redemption. Any of Executive's Shares
not purchased by XxXxxxxx may be redeemed by Company on the same basis as set
forth in Sections 5.5.1 and 5.5.2 above.
5.5.5 Shares Retained By Executive. Any of Executive's Shares
not subject to purchase by XxXxxxxx or redeemed by Company will continue to be
held by Executive. XxXxxxxx will have no purchase rights and Company will have
no redemption rights upon the termination of Executive's employment for any
other reasons except as set forth herein.
5.6 Registration Rights. Upon the termination of his employment
hereunder, in the event that the BodyBilt Shareholders (as defined in the
Merger Agreement) exercise their registration rights at any time with respect
to their shares of Company, Executive will be entitled to register his shares,
at no cost to Executive, along with the BodyBilt Shareholders in the same
manner to the extent permitted by law.
5.7 Waiver of Claims and Covenant Not To Xxx. Executive hereby
waives any and all claims he may have against Company based on or arising out
of the termination of Executive's employment for any reason, provided that all
amounts due and payable to Executive as Liquidated Damages under Section
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5.2.2 have been paid in full. Executive hereby covenants not to file any legal
action or complaint against or otherwise xxx Company to assert any claims
waived in this Section 5.7.
5.8 Disparaging Comments. Except in connection with proceedings by
or before a judicial, administrative, self-regulatory, arbitral or mediation
tribunal or agency and not otherwise proscribed by Section 5.7, Executive will
make no negative or disparaging statement, either orally or in writing, about
Company or any of its directors, officers, shareholders or affiliates following
termination of Executive's employment for any reason.
ARTICLE VI
General
6.1 Notice. All notices and other communications provided for in
this Agreement will be in writing and will be deemed to have been duly given
when: (i) delivered personally; (ii) mailed by United States registered mail
or certified mail, return receipt requested, postage prepaid, addressed as set
forth below; or (iii) mailed by Federal Express, DHL, or such other nationally
recognized overnight courier service, addressed as set forth below:
ADDRESS FOR COMPANY: WITH COPIES TO:
ErgoBilt, Inc. Wolin, Fuller, Xxxxxx & Xxxxxx LLP
5000 Quorum 0000 Xxxx Xxxxxx, Xxxxx 0000
Suite 147, Lock Box 43 Dallas, Texas 75201
Xxxxxx, Xxxxx 00000 Attention: Xxxxxx X. Xxxxxx, Esq.
Attention: Xxxxxx XxXxxxxx, Chairman
ADDRESS FOR EXECUTIVE:
Xxxxxx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
or to such other address as a party may furnish to the others in writing in
accordance herewith, except that notice of change of address will be effective
only upon receipt.
6.2 Binding Effect. This Agreement will inure to the benefit of and
be enforceable by the parties and their respective successors, heirs,
representatives and permitted assigns.
6.3 No Waiver; Entire Agreement. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by Executive and such officer as may be
specifically designated by Company's Board for Company. No waiver by any party
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 party will be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by any party which are not expressly set forth in this Agreement.
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6.4 Headings. Section and Section headings are used herein for
convenience of reference only and will not affect the meaning of any provision
of this Agreement.
6.5 Assignments. This Agreement is personal to Executive and may not
be assigned by Executive or the duties delegated without the prior written
consent of Company's Board. Also, Executive may not assign, transfer,
hypothecate or dispose of any interest in compensation or payments without
Company's Board's prior written consent.
6.6 Governing Law and Venue. This Agreement has been executed in
Dallas County, State of Texas, and the substantive laws of the State of Texas
will govern the validity, construction, enforcement and interpretation of this
Agreement.
6.7 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement will be considered divisible and such provision
will be deemed inoperative to the extent it is deemed unenforceable and in all
other respects this Agreement will remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision will be deemed to be so limited and will be
enforceable to the maximum extent permitted by applicable law.
6.8 Mediation/Arbitration/Legal Fees. If any dispute arises among
the parties with respect to this Agreement, then the parties will submit such
dispute to mediation before a mediator in accordance with the mediation rules
of Dallas County, Texas. If the parties are unable to resolve the dispute
through mediation, they will then submit the dispute to binding arbitration
pursuant to the rules and regulations of the American Arbitration Association
(the "AAA"). The parties agree that if arbitration becomes necessary, they
will utilize and comply with all available rules of the AAA for expediting such
arbitration. The site of the arbitration will be the City of Dallas, Dallas
County, Texas, and will commence as soon as possible but in no event later than
thirty (30) days after a party files for arbitration. In the event of any
action to enforce or interpret this Agreement, the prevailing party therein
will be entitled to recover all reasonable costs and expenses incurred,
including reasonable attorneys' fees.
IN WITNESS HEREOF, the parties have duly executed this Agreement as of
the date first above written.
COMPANY:
-------
ERGOBILT, INC.,
A Texas Corporation
By:
---------------------------------------
Xxxxxx XxXxxxxx
Its: Chairman of the Board of
Directors
EXECUTIVE:
---------
------------------------------------------
XXXXXX XXXXX
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ERGOBILT COMPANIES
STANDARD EMPLOYEE NON-DISCLOSURE AGREEMENT
This Employee Non-Disclosure Agreement (the "Agreement") is executed as
of October 15, 1996, by and between the undersigned employee ("Employee") of
ErgoBilt, Inc., a Texas corporation ("Company"), and/or of BodyBilt Seating,
Inc., a Texas corporation ("Subsidiary"), with respect to the following facts.
A. Company and Subsidiary (collectively, the "ErgoBilt Companies")
are engaged in the business of designing, manufacturing, marketing, and selling
ergonomically correct chairs.
B. The ErgoBilt Companies may from time to time disclose to Employee
certain confidential proprietary information that has been developed by the
ErgoBilt Companies and/or their affiliates. Confidential Information may also
be disclosed to Employee inadvertently or unlawfully by third parties. Such
confidential information represents a unique valuable asset of the ErgoBilt
Companies.
C. Employee desires to be employed by the ErgoBilt Companies and the
ErgoBilt Companies are willing to employ Employee on the condition that
Employee agrees to define Employee's duties and obligations regarding the
disclosure and/or use of such confidential proprietary information on the terms
and conditions set forth herein.
Now, therefore, in consideration of the premises and mutual covenants
contained herein, and for such other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
(i) Confidential Information. For purposes of this Agreement, the
term "Confidential Information" will mean trade secrets, product and other
research and development activities, inventions, and any other knowledge, data
or information that the ErgoBilt Companies treat as proprietary, whether or not
such Confidential Information is patentable or copyrightable, however it is
embodied and irrespective of whether it is labeled as "proprietary" or
"confidential" and whether or not it was developed by Employee. By way of
illustration but not limitation, Confidential Information includes (a) know-
how, ideas, improvements, discoveries, developments, processes, existing and
future product design and performance specifications, techniques, formulas,
algorithms, product architectures, source and object codes, data, data
compilations and other works of authorship; and (b) information regarding the
ErgoBilt Companies' marketing, sales, research and development and new product
plans, ErgoBilt Companies' business plans, budgets, and unpublished financial
statements, ErgoBilt Companies' licenses, suppliers and customers, and
information regarding the skills and compensation of ErgoBilt Companies'
officers and employees.
(ii) Non-Disclosure. Employee recognizes that Employee will have no
right whatsoever to use, exploit, or disclose the Confidential Information for
any other purpose, or to disclose it to any other employee of the ErgoBilt
Companies other than on a "need to know" basis, to disclose it to any third
party without the written consent of the ErgoBilt Companies, which consent may
be withheld in the ErgoBilt Companies' sole discretion and which consent, when
given, may require the third party to execute a Non-Disclosure Agreement in a
form satisfactory to the ErgoBilt Companies.
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(iii) Protection Policies and Procedures. Employee will strictly
comply with any and all policies and procedures adopted by the ErgoBilt
Companies so as to protect the Confidential Information. Such policies and
procedures may include, without limitation: marking all written materials
"Confidential Information of (Name of Specific ErgoBilt Company)" and/or with
such other legends necessary or appropriate to identify the materials as the
ErgoBilt Companies' Confidential Information; limiting access to and/or
dissemination of the Confidential Information to those persons who have a "need
to know" the Confidential Information to enable such persons to perform their
duties consistent with the purposes for which such Confidential Information was
disclosed; limiting and otherwise controlling copies or other forms of
reproduction of the Confidential Information; and maintaining the Confidential
Information in a secure place or places so as to preclude unauthorized access
thereto. If Employee is in doubt as to whether certain information constitutes
Confidential Information, Employee should assume such information is
Confidential Information subject to protection under this Agreement and treat
such information accordingly.
(iv) Grounds of Dismissal. Employee acknowledges and agrees that
Employee's breach of his or her obligations under the terms of this Agreement
will constitute grounds for dismissal for cause.
(v) Non-Competition. Employee expressly agrees that Employee will
not use any of the Confidential Information to compete, in any way, with the
ErgoBilt Companies without the prior written consent of the ErgoBilt Companies,
which consent may be withheld in their sole and absolute discretion.
(vi) Injunctive Relief. Employee understands and agrees that the
ErgoBilt Companies have a substantial ongoing investment in the development of
the Confidential Information, and the ErgoBilt Companies would be irreparably
injured if this Agreement were to be breached. Should the ErgoBilt Companies
bring suit for breach of this Agreement or for unauthorized use or disclosure
of any Confidential Information, Employee consents to jurisdiction and venue in
any federal or state court in Texas, in Dallas County, and agrees that
preliminary and permanent injunctive relief would be an appropriate, though not
exclusive, remedy and agrees not to oppose any request for expedited discovery
in such an action.
(vii) Return of Written Materials. Immediately upon Employee's
voluntary or involuntary termination of employment with the ErgoBilt Companies
for any reason, with or without cause, or at any time promptly upon the written
request of the ErgoBilt Companies, Employee will return to the ErgoBilt
Companies the original and all copies of the Confidential Information, and all
notes, diagrams, papers, documents and other materials irrespective of form,
concerning or relating to such Confidential Information in the possession or
control of Employee.
(viii) No Assignment, Binding Effect. Employee may not assign this
Agreement or Employee's obligations hereunder. This Agreement will be binding
on Employee and his or her heirs, beneficiaries, representatives, successors
and assigns. This Agreement will inure to the benefit of the ErgoBilt
Companies and their respective successors and assigns.
(ix) Governing Law. This Agreement will be governed and interpreted
by the laws of the State of Texas.
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(x) Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the ErgoBilt Companies
will be entitled to reasonable attorney's fees, costs, and necessary
disbursements in addition to any other relief to which they may be entitled.
(xi) Modifications. All additions or modifications to this Agreement
must be made in writing and must be signed by Employee and the ErgoBilt
Companies.
(xii) Survival of Certain Covenants. Employee's obligations hereunder
and his or her acknowledgments and agreements contained in Sections (ii), (v),
and (vii) hereof will survive the termination of this Agreement.
This Agreement will be deemed executed and effective as of the date
first set forth above.
Employee: ErgoBilt, Inc.
A Texas Corporation
------------------------------ -------------------------------------
Signature By:
----------------------------------
Printed Name:
------------------------
Its:
---------------------------------
BodyBilt Seating, Inc.,
A Texas Corporation
(formerly, EB Subsidiary, Inc.)
By:
----------------------------------
Printed Name:
------------------------
Its:
---------------------------------
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