Exhibit 10.1
Draft 12/__/00-1
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the ___ day of December, 2000, by and between THE
XXXXXX BIOMECHANICS GROUP, INC., a New York corporation with offices at 000
Xxxxxxx Xxxx, Xxxx Xxxx, XX 00000 ("Xxxxxx"), and XXXXXX X. XXXXXX, residing at
00 Xxx Xxxxxxx, Xxxxxx Xxxxxxx, XX 00000 (the "Executive").
WHEREAS, Xxxxxx is desirous of employing the Executive as the President
and Chief Executive Officer 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 2003 (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
ninety (90) 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 President and Chief Executive
Officer of Xxxxxx. Subject to the general policy directions of the Board of
Directors of Xxxxxx (the "Board") and Xxxxxx'x Certificate of Incorporation and
By-Laws, the Executive shall have complete supervision and control over, and
sole executive responsibility for, the business operations of Xxxxxx. The
Executive shall have such other duties as customarily performed by the President
and Chief Executive Officer and also have such other powers and duties as may
be, from time to time, prescribed by the Board, provided that the nature of the
Executive's powers and duties so prescribed shall not be inconsistent with the
Executive's position and duties hereunder.
The Executive shall report directly and exclusively to the Board,
and no other executive officer shall be appointed with authority over the
business operations of Xxxxxx or with authority otherwise superior to that of
the Executive. During the Term, at each annual meeting of shareholders (or at
any special meeting of shareholders at which directors are to be elected),
Xxxxxx shall nominate the Executive to serve on the Board and shall use its best
efforts to ensure that the Executive is elected a director 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 and shall use his best efforts to advance the best interests of
Xxxxxx; provided, however, that, it shall not be a violation of this Agreement
for the Executive to (i) serve on professional, industry, civic or charitable
boards, committees or organizations, (ii) manage passive personal investments,
(iii) serve on the board of directors of corporations not in competition with
Xxxxxx, (iv) engage in teaching, writing, lecturing and other educational
activities, (v) maintain professional appointments and affiliations with
hospitals and similar organizations and (vi) attend educational seminars and
executive courses and programs as referred to in Section 4(h) below, so long as
any such activities do not interfere with the performance of the Executive's
responsibilities as an employee of Xxxxxx in accordance with this Agreement.
(c) The Executive's principal office location will be at Xxxxxx'x
executive office at 000 Xxxxxxx Xxxx, Xxxx Xxxx, XX.
4. Compensation and Benefits.
(a) Base Salary. Xxxxxx shall pay to the Executive an annual base
salary (the "Base Salary") of not less than $175,000, payable in accordance with
Xxxxxx'x payroll practices for its executive employees. The Board will review
the Base Salary and other compensation received by the Executive not less than
annually during the Term with a view to increasing them based upon the
Executive's performance, the performance of Xxxxxx, inflation, then prevailing
industry salary scales and other relevant factors. The Base Salary provided
hereunder, as increased by the Board from time to time, shall not be reduced
below $175,000 without the Executive's consent.
(b) (i) Annual Bonus. The Executive shall be eligible to receive,
with respect to each calendar year, a performance-based cash bonus (the
"Bonus"), in addition to and separate from the Executive's Base Salary. The
first such bonus shall be based on the calendar year commencing January 1,
2001.On or before March 1 of each year, the Executive shall prepare and submit
to the Compensation Committee for approval a Bonus Plan for executive employees
which (A) shall establish performance targets for the year and an objective
method of calculating bonuses for each covered executive (hereafter referred to
as an executive's "Bonus Opportunity"); and (B) will permit the Compensation
Committee to award additional amounts in
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its discretion, including amounts based upon revenues and/or profits achieved or
anticipated due to acquisitions.
(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 175,000 shares of its common stock under Xxxxxx'x 1992 Stock
Option Plan (the "Option Plan"), at an exercise price of $1.525 per share. The
Options shall be issued pursuant to a stock option agreement attached hereto as
Exhibit A. Of the foregoing, and subject to acceleration or termination under
certain circumstances as further provided below or in the Option Agreement,
Options for 58,333 shares shall vest on each of December 31, 2001 and December
31, 2002 and Options for 58,334 shares shall vest on December 31, 2003.
(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 therefore in accordance with
Xxxxxx'x policy. Xxxxxx shall make available to the Executive a company credit
card in the Executive's name for such purpose. The Compensation Committee may,
in consultation with the Executive, develop reasonable guidelines with respect
to the Executive's expenses consistent with his status and with a view to a
reasonable relationship between such expenses and the best interests of the
Company, to which guidelines the Executive will, in good faith, adhere, and from
which the Executive will not willfully and materially depart without prior
written approval.
(e) Participation in Benefit Plans. The Executive, subject to
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, 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) Key Man Life Insurance. Xxxxxx shall have the right to purchase
$5,000,000 of key-man life insurance on the Executive's life, at Xxxxxx'x sole
expense. In addition, Xxxxxx agrees to purchase an additional $1,000,000 of life
insurance payable to a beneficiary designated by the Executive for so long as
the Executive is employed by Xxxxxx. The Executive shall (a) cooperate fully
with Xxxxxx in obtaining such life insurance, (b) sign any necessary consents,
applications and other related forms or documents and (c) take any reasonably
required medical examinations. The Executive does not represent that he is
insurable but he has no reason to believe he is not insurable. Xxxxxx agrees to
assign the $1,000,000 policy to the Executive or his designated beneficiary if
his employment is terminated for any reason, net of any cash value. Such policy
may be structured as "split-dollar" insurance or written in such other form such
that any cash value therein is retained by Xxxxxx upon such assignment.
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(g) Vacation. The Executive shall be entitled to five (5) weeks of
paid in each calendar year (pro rated for the number of days in any such year
during which he is so employed) and to all paid holidays given by Xxxxxx to its
employees. No more than two consecutive weeks of vacation shall be taken at any
one time without the approval of the Compensation Committee, and the Executive
shall schedule vacations in a manner consistent with Xxxxxx'x seasonal or other
significant business requirements.
(h) Educational Seminars and Programs. Upon approval by the Board
(which approval shall not be unreasonably withheld), employee shall be entitled
to attend and Xxxxxx shall pay and/or reimburse the Executive, in amounts not
exceeding $20,000 per year, for executive educational seminars and/or executive
MBA programs and courses appropriate for executives of Executive's level.
5. Termination and Termination Payments.
The Executive's employment hereunder shall terminate 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
evidenced by a resolution adopted by a vote of a majority of the members of the
entire Board finding that the Executive has:
(i) breached, failed or refused to comply with any of the
material terms of this Agreement, for reasons other than Good Reason or
Disability; or
(ii) refused or neglected to perform his material duties under
this Agreement, for reasons other than Good Reason or Disability; or
(iii) willfully or intentionally failed to carry out, in any
material respect, instructions of the Board which are not inconsistent with his
position;
(iv) been convicted of any act of fraud, larceny,
misappropriation of funds or embezzlement or of a crime other than traffic or
other misdemeanors; or
(v) been found personally (but not vicariously) guilty
(civilly or criminally) of acts constituting sexual harassment;
provided, however, that
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(A) the case of clauses (i), (ii) and (iii) above, the Executive
shall receive thirty (30) days' advance written notice that the Board intends to
hold a meeting to consider the Executive's termination for Cause and specifying
the actions constituting Cause, during which period he shall have the
opportunity to cure the conduct constituting Cause;
(B) the Executive shall be given a reasonable opportunity at such
meeting, accompanied by his counsel, to be heard by the Board on the issue prior
to the Board's vote on the matter;
(C) any act, or failure to act, based upon authority given pursuant
to a resolution of the Board or based upon the advice of counsel for Xxxxxx
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of Xxxxxx and shall not
constitute Cause; and
(D) in the case of paragraphs (iv) and (v) above the Board 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 90 consecutive days (exclusive of any vacation permitted under Section
4(g) hereof) (B) the Board 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 120th
day following the onset of such Disability, and (C) the Executive in fact fails
to resume his full-time employment with Xxxxxx on or before the 120th 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
180 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:
(i) Removal from, or failure to be reappointed, elected or
reelected to, his position as President and Chief Executive Officer or member of
the Board or the failure of
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the Company to renew this Agreement at the end of the Term for at least one (1)
year (other than for Cause or by reason of the Executive's death or Disability);
or
(ii) Material diminution in the Executive's title, position,
duties or responsibilities, or the assignment to the Executive of duties that
are inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the positions specified in this Agreement,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith; or
(iii) Reduction in the Executive's Base Salary or Bonus
Opportunity (as defined in Section 4(b)) or any failure by the Board to
implement or pay any compensation arrangements (including stock options)
contemplated by this Agreement; or
(iv) 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;
(v) Failure of Xxxxxx to comply with any material regulatory
requirement applicable to it including, without limitation, the rules and
regulations of the Securities and Exchange Commission, which failure persists
for 30 days following written objection by the Executive to the compliance
status of Xxxxxx, unless such failure is caused by the Executive's acts or his
failure to act by virtue of his position as a director and/or officer of Xxxxxx;
(vi) Relocation of the offices of Xxxxxx without the consent
of the Executive to a location other than a location which is (A) in Long Island
but no more than fifty miles driving distance east from Executive's current
residence; or (B) in New York City (other than Staten Island) or lower
Westchester County.
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(vii) the failure of Xxxxxx to renew this Agreement for a
period of at least one (1) year as of the expiration of the Term or any extended
term hereof on substantially the same terms as are set forth in this Agreement;
or
(viii) The occurrence of a Change of Control (as such term is
defined in Section 12(b) herein); provided, however, that a Change of Control
shall be deemed Good Reason only if the Executive delivers to Xxxxxx a written
notice of resignation (which notice shall not be required to state any reason)
during the last 90 days of the 365 day period following the effective date of a
Change of Control, which resignation may be effective no earlier than thirty
(30) days following delivery thereof, provided that Good Reason shall not exist
pursuant to any subsection of this Section (c) unless (A) the Executive shall
have delivered to the Board not less than thirty (30) days notice of such
failure (10 days in the case of a failure to make payment of Base Salary or a
bonus due) that he intends to terminate his employment for Good Reason, which
notice shall specify the reasons for termination, and the Board fails to remedy
the circumstances giving rise to the Executive's notice within such 30 or 10 day
period, as the case may be; or (B) the same failure shall occur within 90 days
after a previous such failure for which Executive shall have furnished the
notice set forth in clause "(A)" above.
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 accrued and unpaid Bonus in accordance with Section 4(b);
(iii) treat the Options as set forth in the Stock Option
Agreement;
(iv) reimburse the Executive, or his estate, as the case may
be, for any expenses reimburseable 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");
(v) (A) in the case of Executive's death, (1) pay to
Executive's estate, or to the beneficiaries of the $1,000,000 life insurance
policy referred to in Section 4(f), the entire amount of such proceeds; or (2)
in the event such insurance is not in force or the proceeds thereof are less
than his annual Base Salary then in effect, pay to Executive's estate the excess
of such annual Base Salary over such proceeds, in twelve equal monthly payments;
and (B) in the event of Executive's disability, pay to him or his representative
an amount equal to his annual Base Salary then in effect in twelve equal monthly
payments. In any of the foregoing cases,
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payment shall made or commence within 30 days after the delivery to Xxxxxx of
reasonable evidence of the appointment of an executor, administrator or other
representative legally authorized to receive such payments.
(vi) 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, 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 payments.
(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 Stock Option Agreement, and the Executive shall have
no further entitlement to any other compensation or benefits from Xxxxxx, except
as set forth herein. Without limitation of the foregoing, all vested and
unvested options held by the Executive shall be cancelled and be of no force or
effect. In addition, the Executive shall be deemed to have offered any shares of
Common Stock purchased by him pursuant to the Stock Option Agreement to Xxxxxx
at a price per share equal to the lower of the Exercise Price or the fair market
value (as determined pursuant to Section 5 of the 1992 Stock Option Plan of
Xxxxxx, as amended through November 30, 1999) of the Common Stock at the time of
such termination. Xxxxxx shall have 30 days from the date of termination to
deliver written notice to the Executive electing to purchase such shares.
(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 after termination of his employment;
(ii) treat the Options as set forth in the Stock Option
Agreement;
(iii) pay to the Executive the sum of three hundred thousand
dollars ($300,000) over a period of one year in equal installments in accordance
with Xxxxxx'x payroll practices commencing within fifteen (15) days after
termination of his employment; and
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(iv) pay to the Executive a lump sum an amount equal to any
accrued and unpaid Bonus in accordance with Section 4(b); and
(v) pay or reimburse the Executive for eighteen (18) 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 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), 6(c) or 12, he shall not be entitled
to any payments or benefits that are not explicitly provided herein.
(e) In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Notwithstanding the foregoing, the Executive will use all commercially
reasonable efforts to assist Xxxxxx and provide consultation during the one (1)
year period following any termination of his employment.
7. Covenant Regarding Inventions.
(a) 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 deem 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.
(b) Notwithstanding the foregoing, Xxxxxx shall not obtain by reason
of this Agreement any rights in the patents, inventions or developments created
by Executive prior to the date hereof and that are set forth on Schedule A
attached hereto.
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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 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 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;
(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 matters referred to in clauses (i) and (ii) of this Section 8(a)
shall not apply to information that (A) is required to be disclosed by law or by
any government, regulatory or self-regulatory agency or body, except with
respect to 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(a), 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.
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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, 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 their 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.
(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) The provisions of Section 9(a) shall not be deemed to preclude
the Executive from
(i) engagement by an entity some of the activities of which
are competitive with a Competitive Business if the Executive's engagement does
not, directly or indirectly, relate to, and the Executive is segregated
completely from, such Competitive Business; provided, however, that the
Executive shall have advised such entity of the existence of this Agreement and
shall have obtained a written acknowledgement from such entity that it is aware
of the restrictions on Executive's employment with a Competitive Business and
will segregate the Executive from any Competitive Business operated by the
entity for the requisite period; and
(ii) 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
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of the activities of which constitute a Competitive Business so long as such
securities do not, in the aggregate, constitute more than five percent (5%) 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").
(c) Notwithstanding the foregoing, if Xxxxxx shall fail to make any
payment due to the Executive under Section 6(c), which failure shall continue
for ten (10) days after delivery to Xxxxxx of written notice of non-payment, the
restrictions set forth in subsection (a) above shall terminate.
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, which is not cured or rectified within the time periods set forth in
Section 5(a) above, 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. Acknowledgements 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 by him, 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.
(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
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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. Change of Control.
(a) If the Executive elects to terminate his employment pursuant to
Section 6(c)(viii), Xxxxxx shall pay the Executive the amounts provided under
Section 6(c) of this Agreement. Such amount shall be payable by Xxxxxx to the
Executive as provided in Section 6(c). The Executive shall be responsible for
payment of all income or excise taxes which may be imposed on the Executive as a
result of the characterization of any such payments by the Internal Revenue
Service upon audit of his tax returns as "excess parachute payments," as such
phrase is defined in Section 280G of the Code.
(b) For the purpose of this Agreement, a "Change of Control" shall
be deemed to have occurred if (i) any Person (other than (A) the Company or any
subsidiary, (B) any pension, profit sharing, employee stock ownership or other
employee benefit plan of the Company or any subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such capacity or (C) any
Person who is directly or indirectly controlled by Xxxxxx Xxxxxxx or the
Executive) is or becomes, after the date of this Agreement, the beneficial owner
of 50.1% or more of the total voting power of the voting securities of Xxxxxx,
(ii) during any period of up to two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election or appointment by the Board of Directors or
nomination or recommendation for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) a merger or consolidation of
the Company is consummated with any other entity, (other than a merger or
consolidation with an entity which is directly or indirectly controlled by
Xxxxxx Xxxxxxx or the Executive or which would result in the Voting Shares of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 50.1% of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding), or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
a majority of the Company's operating assets.
13. Deleted
13
14. 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
(c) 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. Xxxxxx
000 Xxxxxxx Xxxx 31 The Birches
Xxxx Xxxx, XX 00000 Xxxxxx Xxxxxxx, XX 00000
Attn.: [____________________] Facsimile: 000-000-0000
Facsimile: (516) [ ]
Copies of all notices to Xxxxxx or the Executive under this Agreement shall be
sent to:
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx 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.
15. Miscellaneous.
(a) Successors; Binding Effect; Third Party Beneficiaries. In the
event of a future disposition by Xxxxxx (whether direct or indirect, by sale of
assets or stock, merger, consolidation or otherwise) of all or substantially all
of its business and/or assets, Xxxxxx will require any successor, by agreement
in form and substance reasonably satisfactory to the Executive or by operation
of law, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Xxxxxx would be required to perform if no
such disposition had taken place. As used in this Agreement, "Xxxxxx" shall mean
Xxxxxx as herein before defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
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 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
14
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, together with the other
Executive Agreements, constitute 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
extraneous agreements. This Agreement may be amended only in writing executed by
the parties hereto affected by such amendment.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first set forth above.
EXECUTIVE
-----------------------------------
Xxxxxx X. Xxxxxx
THE XXXXXX BIOMECHANICS GROUP, INC.
By:
-------------------------------
Name:
Title:
16
Schedule A
Prior Inventions
1. Light weight, compact orthotic device for controlling knee instability -
Patent # 4,802,466
2. Orthotic device for controlling knee instability - Patent # 4,803,975
3. Knee joint hinge for brace Patent # 5,286,250
4. Shoulder pad brace - Patent # 4,654,893
17
Exhibit A
Stock Option Agreement
18
