Exhibit 10.26
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of December 3, 2001, by and between XXXXXX, INC., a
New York corporation with offices at 000 Xxxxxxx Xxxx, Xxxx Xxxx, XX 00000
("Xxxxxx"), and XXXXXX X. XXXXX, residing at 0 Xxxxx Xx., Xxxx Xxxxxxxxx, X.X.
00000.
WHEREAS, Xxxxxx is desirous of employing the Executive as a Vice
President of Sales of Xxxxxx, and the Executive is desirous of serving Xxxxxx in
such capacities, all upon the terms and subject to the conditions hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment.
Xxxxxx agrees to employ the Executive, and the Executive agrees to be
employed by Xxxxxx, upon the terms and subject to the conditions of this
Agreement.
2. Term.
The term of the Executive's employment under this Agreement shall
commence on the date hereof and shall continue through December 31, 2004 (the
"Initial Term"), unless earlier terminated as hereinafter provided. The
Executive's employment shall continue after the Initial Term on a year-to-year
basis (each, an "Additional Term" and, together with the Initial Term, the
"Term") unless either the Executive or Xxxxxx gives written notice to the other
not later than forty-five (45) days prior to the expiration of the Initial Term
or any such Additional Term, as the case may be, of the decision not to extend
the Executive's employment.
3. Duties; Efforts.
(a) The Executive shall serve as Vice President of Sales for
Xxxxxx. The Executive shall have such duties as are customarily performed by a
vice president of sales, including, but not limited to, directing and supporting
field sales and operations staff, developing, managing, and implementing sales
programs, implementing strategic sales and business plans, establishing and
maintaining relationships with referral sources and the patient community,
measurement of sales programs, developing and maintaining sales training
programs, participating in the preparation of the annual budget, and developing
and implementing a sales tracking and reporting system, and also have such other
powers and duties as may be, from time to time, prescribed by the President or
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Chief Executive Officer of Xxxxxx. The Executive shall report directly to the
President and Chief Executive Officer of Xxxxxx.
(b) The Executive shall devote all of his business time,
attention and energies to the business and affairs of Xxxxxx and its affiliated
corporations, shall use his best efforts to advance the best interests of
Xxxxxx.
(c) The Executive's principal office location will be at
Xxxxxx'x executive office at 000 Xxxxxxx Xxxx, Xxxx Xxxx, XX. The Executive
shall travel to other locations as may be necessary for the Executive to perform
his duties.
4. Compensation and Benefits.
(a) Base Salary. Xxxxxx shall pay to the Executive a base
salary (the "Base Salary") of $120,000 for the first year of the Initial Term.
Beginning with the year commencing January 1, 2003, the Base Salary shall be
reviewed annually by the Company. Base salary shall be paid in accordance with
Xxxxxx'x payroll practices for its executive employees.
(b) Bonus. The Executive shall be eligible to receive, with
respect to each calendar year, a cash bonus (the "Bonus"), in addition to and
separate from the Executive's Base Salary, pursuant to Xxxxxx'x bonus program
for Xxxxxx'x executive employees. The First such bonus shall be based on the
calendar year commencing January 1, 2002.
(c) Stock Options. In addition to the Executive's Base Salary
and Bonus, upon the execution of this Agreement, Xxxxxx shall grant to the
Executive options to purchase 75,000 shares of Xxxxxx'x common stock, par value
$.02 per share, under Xxxxxx'x 2001 Stock Incentive Plan, at an exercise price
of $6.50 per share. The Options shall be issued pursuant to a stock option
agreement in the form attached hereto as Exhibit A ("Stock Option Agreement").
(d) Out-of-Pocket Expenses. Xxxxxx shall promptly pay to the
Executive the reasonable expenses incurred by him in the performance of his
duties hereunder, including, without limitation, those incurred in connection
with business related travel or entertainment, or, if such expenses are paid
directly by the Executive, shall promptly reimburse him for such payment,
provided that the Executive properly accounts therefor and submits appropriate
receipts therefor in accordance with Xxxxxx'x expense policy.
(e) Participation in Benefit Plans. The Executive, subject to
the terms, conditions and eligibility requirements applied generally, shall be
entitled to participate in or receive benefits under any pension plan, health
and accident plan or any other employee benefit plan or arrangement made
available now or in the future by Xxxxxx to its employees and senior executives
including, without limitation, 401(k) plans,
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and medical, dental, life and disability plans of Xxxxxx. Nothing herein shall
be deemed to require the Company to establish or retain any such plans.
(f) Vacation. The Executive shall be entitled to paid
vacation in accordance with Xxxxxx'x policy.
5. Termination and Termination Payments.
The Executive's employment hereunder shall terminate immediately upon
the Executive's death or the Executive's voluntarily leaving the employ of
Xxxxxx (other than for "Good Reason" (as defined in Section 5(c)), and may be
terminated as follows:
(a) For Cause. Xxxxxx shall have the right to terminate the
Executive's employment for "Cause," and, subject to Xxxxxx'x obligations under
Section 6(c), without Cause. A termination for "CAUSE" is a termination by the
Chief Executive Officer or by the board of directors of Xxxxxx (the "BOARD")
finding that the Executive has:
(i) breached, failed or refused to comply with
any of the material terms of this Agreement (which shall include Section 4(d)),
for reasons other than Disability; or
(ii) refused, neglected or failed to perform his
material duties under this Agreement, for reasons other than Disability; or
(iii) been grossly negligent or has willfully or
intentionally failed to carry out, in any material respect, instructions of the
Chief Executive Officer or the Board; or
(iv) been convicted of or admitted to (including
nolo contendere) any act of fraud, larceny, misappropriation of funds or
embezzlement or to or of a crime other than traffic offenses; or
(v) has committed an act constituting sexual
harassment or employment discrimination, or
(vi) repeatedly engaged in substance abuse;
provided, however, that
(A) on one occasion in the case of clauses (i), (ii) and (iii)
above, provided the Executive shall have received written notice at least 5 days
prior to such termination specifying the actions constituting Cause, during
which period he shall have the opportunity to cure such conduct; and
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(B) in the case of paragraphs (iv), (v), and (vi) above the
Chief Executive Officer of the Board of Xxxxxx may terminate the Executive
immediately upon delivery of a notice of termination.
(b) Upon Death or For Disability. The Executive's employment
with Xxxxxx shall immediately terminate upon his death without any further
action. Xxxxxx shall have the right to terminate the Executive's employment
immediately upon delivery of notice to the Executive as a result of the
Executive's Disability. For purposes of this Agreement, a "DISABILITY" shall be
deemed to have occurred
(i) if (A) the Executive has been unable due to any
physical or mental illness or injury substantially to perform his duties
hereunder for at least 30 consecutive days (exclusive of any vacation permitted
under Section 4(f) hereof), (B) the Company delivers a written notice to the
Executive ("Disability Notice") following such period stating that the Board
intends to terminate the Executive by reason of Disability, but no earlier than
the 45th day following the onset of such Disability, and (C) the Executive in
fact fails to resume his full-time duties with Xxxxxx on or before such 45th day
following the onset of such Disability; or
(ii) if the Executive is unable, due to any physical
or mental illness or injury, substantially to perform his duties hereunder for
more than 90 days in any 360 day period.
(c) By the Executive for Good Reason. The Executive shall have
the right to terminate his employment with Xxxxxx for "Good Reason." For
purposes of this Agreement, "GOOD REASON" shall mean the breach, failure or
refusal of Xxxxxx to comply with any of its material obligations under this
Agreement, in any case other than an isolated, insubstantial and inadvertent
failure, if such breach, failure, or refusal is not cured by the Company within
thirty (30) days after receiving written notice from the Executive setting forth
the nature of such breach.
6. Payments Upon Termination.
(a) Death or Disability. In the event of the
termination of the Executive's employment as a result of his death or
Disability, Xxxxxx shall:
(i) pay to the Executive or his estate, as the
case may be, the Base Salary through the date of his death or Disability (pro
rated for any partial month);
(ii) pay to the Executive or his estate, as the
case may be, any earned and unpaid Bonus in accordance with Section 4(b) plus
the pro rated portion of any guaranteed bonus for the year of termination;
(iii) treat the Options as set forth in the
Stock Option Agreement;
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(iv) reimburse the Executive, or his estate, as
the case may be, for any expenses reimbursable pursuant to Section 4(d) (the
amounts payable pursuant to the foregoing clauses (i), (ii) and this clause (iv)
being hereafter referred to as the "ACCRUED OBLIGATIONS"); and
(v) provide to the Executive and/or his family,
as the case may be, (A) for the first year after the Executive's death or
Disability, continued coverage under all welfare benefit plans including
medical, accident, life or other disability plans and programs in which the
Executive and his family participated immediately prior to his death or
Disability to the extent such plans are maintained by the Company, and sharing
in the cost of such benefit coverage in the same proportion as was in effect for
the Executive immediately prior to his death or Disability and (B) after such
one (1) year period, the Executive or his estate, as the case may be, shall be
responsible for the full cost of the Executive's COBRA coverage.
(b) By Xxxxxx for Cause or by the Executive Voluntarily (other than for
Good Reason). In the event that the Executive's employment is terminated by
Xxxxxx for Cause or by the Executive voluntarily (other than for Good Reason),
Xxxxxx shall (i) pay to the Executive the Accrued Obligations and (ii) treat the
Options as set forth in the respective Stock Option Agreement, and the Executive
shall have no further entitlement to any other compensation or benefits from
Xxxxxx. Without limitation of the foregoing, all unvested options held by the
Executive shall be cancelled and of no effect.
(c) By the Executive for Good Reason or by Xxxxxx other than
for Cause or the Executive's Disability. In the event that the Executive's
employment is terminated by the Executive for Good Reason or by Xxxxxx other
than for Cause or the Executive's Disability, then Xxxxxx shall:
(i) pay to the Executive the Accrued
Obligations, within fifteen (15) days of termination of his employment;
(ii) treat the Options as set forth in the Stock
Option Agreement;
(iii) continue to pay Executive for a period of
six (6) months his Base Salary in effect on the date of termination;
(iv) pay to the Executive a lump sum in an
amount equal to (A) any earned and unpaid Bonus in accordance with Section 4(b)
plus the pro rated portion of any guaranteed bonus for the year of termination;
and
(v) pay or reimburse the Executive for six
(6) months after the Executive's termination, for continued coverage under all
welfare benefit including medical, accident, life or other disability plans and
programs in which the Executive
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participated immediately prior to his termination, (provided that the Executive
will share the cost of such benefit coverage in the same proportion as was in
effect for the Executive immediately prior to his termination).
(d) The Executive acknowledges that upon the termination of
his employment pursuant to Sections 6(a), 6(b) or 6(c), he shall not be entitled
to any payments or benefits that are not explicitly provided herein.
7. Covenant Regarding Inventions.
The Executive shall disclose promptly to Xxxxxx any and all
inventions, discoveries, improvements and patentable or copyrightable works
developed, initiated, conceived or made by him, either alone or in conjunction
with others, during the Term hereof, all of which shall be considered "work for
hire," and he assigns and shall assign, without additional consideration, all of
his right, title and interest therein to Xxxxxx or its nominee. Whenever
requested to do so by Xxxxxx, the Executive shall execute any and all
applications, assignments or other instruments that Xxxxxx shall xxxx necessary
to apply for and obtain letters patent, trademarks or copyrights of the United
States or any foreign country, or otherwise protect Xxxxxx'x interest therein.
These obligations shall continue beyond the conclusion of the Term with respect
to inventions, discoveries, improvements or copyrightable works made by the
Executive during the Term and shall be binding upon the Executive's assigns,
executors, administrators and other legal representatives.
8. Protection of Confidential Information.
As an inducement to Xxxxxx to enter into and perform its
obligations under this Agreement, the Executive acknowledges that he has been
and will be provided with information about, and his employment by Xxxxxx will,
throughout the Term, bring him into close contact with, many confidential
affairs of Xxxxxx, including proprietary information about the business of
Xxxxxx (the "BUSINESS") including, without limitation, costs, profits, finances,
internal financial statements, projections, markets, sales, customers,
advertisers, vendors, products, key personnel, pricing policies, operational
methods, technical processes and methods, plans for future developments,
software, data bases, computer programs, specifications, documentation, designs,
trade secrets, technology, know-how, research and development, inventions,
patents and copyrights (and any renewals, reissues, extensions, divisions,
continuations and continuations in part thereof and registrations, applications,
patents of addition and inventors certificates) and other information not
available to the public (collectively "Confidential Information"), all of which
are highly confidential and proprietary and all of which were developed by
Xxxxxx at great effort and expense. The Executive further acknowledges that the
services to be performed by him under this Agreement are of a special unique,
unusual, extraordinary and intellectual character and that the nature of the
relationship of the Executive with Xxxxxx is such that the Executive is capable
of competing with Xxxxxx. In
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recognition of the foregoing, the Executive covenants and agrees during the Term
and thereafter he will:
(a) keep secret all Confidential Information of
Xxxxxx'x Business and not disclose them to anyone outside of Xxxxxx, either
during or after the Term, except with Xxxxxx'x prior written consent, with may
be withheld for any or no reason;
(b) not make use of any of such Confidential
Information for his own purposes or the benefit of anyone other than Xxxxxx,
provided that the Confidential Information shall not include any information
that (A) is required to be disclosed by law or by any government, regulatory or
self-regulatory agency or body (excluding any Confidential Information which the
Executive is advised in writing by counsel to Xxxxxx is not required to be
disclosed); or (B) is or becomes generally available to the public other than as
a result of the Executive's breach of this Section 8; provided that Executive
shall have given Xxxxxx prompt notice of any such order or subpoena so that
Xxxxxx may contest any such production; and
(c) deliver promptly to Xxxxxx on termination
of this Agreement, or at any time Xxxxxx may so request, all Confidential
Information, including but not limited to memoranda, notes, records, computer
software discs, reports and other confidential documents (and all copies
thereof) relating to the Business, that he may then possess or have under his
control, except that he may retain personal notes, notebooks, journals and
diaries provided that such materials do not contain confidential information.
9. Restriction of Competition; Interference; Non-Solicitation.
(a) As an inducement to Xxxxxx to enter into and perform its
obligations under this Agreement, the Executive covenants and agrees that,
during the period of his employment and for a period of one (1) year after the
termination of his employment for any reason, neither the Executive nor his
affiliates will, directly or indirectly, for their account or on behalf of any
other Person (as defined in Section 9(b) below) or as an employer, employee,
consultant, manager, agent, broker, contractor, stockholder, director or officer
of a corporation, investor, owner, lender, partner, member, joint venturer,
licensor, licensee, sales representative, distributor, or otherwise:
(i) Solicit or engage in any business that
engages in the Business of Xxxxxx (each, a "COMPETITIVE BUSINESS").
(ii) Directly or indirectly for his own account
or the benefit of others solicit, hire or retain any employee of Xxxxxx or its
affiliates or persuade or entice any employee of Xxxxxx or its affiliates to
leave the employ of Xxxxxx or its affiliates.
(iii) Molest or interfere with the goodwill and
relationship with any of the customers or suppliers of Xxxxxx or its affiliates.
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(iv) Persuade, accept, induce or solicit any of
the customers, subscribers or accounts of Xxxxxx or its affiliates, now existing
or hereafter obtained, to engage anyone, other than Xxxxxx or its affiliates, to
design, manufacture or market foot and gait-related biomechanical products for
such customers, subscribers or accounts; or
(v) invest in, lend money or give financial
support to any Competitive Business.
(b) Nothing contained in this Section 9 shall be deemed to
prohibit the Executive from directly acquiring or holding, solely for
investment, securities of any entity some of the activities of which constitute
a Competitive Business so long as such securities do not, in the aggregate,
constitute more than three percent (3%) of any class or series of outstanding
securities of such entity. For the purpose of this Agreement, "PERSON" shall
mean any individual, entity or group within meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
10. Specific Remedies.
It is understood by the Executive and Xxxxxx that the covenants
contained in this Section 10 and Sections 7, 8 and 9 are essential elements of
this Agreement and that, but for the agreement of the Executive to comply with
such covenants, Xxxxxx would not have agreed to enter into this Agreement. If
the Executive commits a material breach of any of the provisions of Sections 7,
8 or 9 hereof, such breach shall be grounds for termination for Cause. In
addition, the Executive acknowledges that Xxxxxx may have no adequate remedy at
law if he violates any of the terms thereof. The Executive therefore understands
and agrees that Xxxxxx shall have, without prejudice as to any other remedies,
the right upon application to any court of proper jurisdiction and without
posting of any bond or other security whatsoever, to a temporary restraining
order, preliminary injunction, injunction, specific performance or other
equitable relief, it being acknowledged and agreed that any such breach will
cause irreparable injury to Xxxxxx and that money damages will not provide an
adequate remedy to Xxxxxx.
11. Acknowledgments of the Executive and Xxxxxx.
(a) The Executive represents that (i) he has the right to
enter into this Agreement and this Agreement constitutes a valid and binding
obligation enforceable in accordance with its terms, (ii) his execution and
delivery of this Agreement, and the performance of his obligations hereunder are
not in violation of, and do not conflict with or constitute a default under any
agreement by which he is bound or any order, decree or judgment to which he is
subject, and (iii) the provisions of Section 7, 8 and 9 will not impose a
hardship, financial or otherwise, on the Executive nor prevent him from being
gainfully employed.
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(b) Xxxxxx represents that (i) it has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, (ii) the execution and delivery of this Agreement by Xxxxxx and the
performance by Xxxxxx of the transactions contemplated herein have been duly and
validly authorized by all necessary corporate action, (iii) this Agreement is a
legal, valid and binding obligation of Xxxxxx and (iv) the execution and
delivery of this Agreement by Xxxxxx and the performance of its obligations
hereunder are not in violation of, and do not conflict with or constitute a
default under any agreement by which Xxxxxx is bound or any order, decree or
judgment to which Xxxxxx is subject.
12. Notices.
Any notice or other communications required or permitted hereunder
shall be in writing and shall be deemed effective (a) upon personal delivery, if
delivered by hand, (b) upon receipt of electronic confirmation, if sent by
facsimile transmission, (c) three (3) days after the date of deposit in the
mails, if mailed by certified or registered mail (return receipt requested), or
(d) on the next business day, if mailed by an overnight mail service to the
parties,
if to Xxxxxx: if to the Executive:
The Xxxxxx Biomechanics Group, Inc. Xx. Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxx 0 Xxxxx Xx.
Xxxx Xxxx, XX 00000 Xxxx Xxxxxxxxx, Xxx Xxxx 00000
Attn.: Xx. Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
Copies of all notices to Xxxxxx under this Agreement shall be sent to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or at such other address or facsimile number as either party may from time to
time specify to the other.
13. Miscellaneous.
(a) Successors; Binding Effect; Third Party Beneficiaries.
This Agreement shall inure to the benefit of and be enforceable by Xxxxxx, its
successors and assigns. This Agreement is personal to the Executive and, without
the prior written consent of Xxxxxx, shall not be assignable by the Executive
otherwise than by will or the
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laws of descent and distribution with respect to the Executive's rights, if any,
to be paid or receive benefits hereunder. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal representatives. Except
for the foregoing, this Agreement shall not create any rights in favor of any
party other than the parties hereto or their respective successors and assigns.
(b) Law Governing; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without giving effect to the principles of conflicts of law). Xxxxxx and the
Executive each agrees that the federal or state courts located in the State of
New York shall have exclusive jurisdiction in connection with any dispute
arising out of this Agreement. Any litigation proceeding under this Agreement
shall be confidential in nature to the fullest extent permitted by applicable
law.
(c) Severability. If any provision of this Agreement, or any
part of any of them, is hereafter construed or adjudicated to be invalid or
unenforceable, the same shall not affect the remainder of the covenants or
rights or remedies which shall be given full effect without regard to the
invalid portions. If any of the covenants set forth herein is held to be invalid
or unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision and in its
reduced form said provision shall then be enforceable.
(d) Headings. The headings of this Agreement are for
convenience of reference only and shall not affect in any manner any of the
terms and conditions hereof.
(e) Acts and Documents. The parties agree to do, sign and
execute all acts, deeds, documents and corporate proceedings necessary or
desirable to give full force and effect to this Agreement.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
(g) Modifications and Waivers. No term, provision or condition
of this Agreement may be modified or discharged unless such modification or
discharge is authorized by the Board and is agreed to in writing and signed by
the Executive. No waiver by either party hereto of any breach by the other party
hereto of any term, provision or condition 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 at any prior or subsequent time.
(h) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter herein and
supersedes all prior agreements, negotiations and discussions between the
parties hereto, there being no
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extraneous agreements. This Agreement may be amended only in writing executed
by the parties hereto affected by such amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first set forth above.
EXECUTIVE
/s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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