EXHIBIT 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 13th day of February, 2001, 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.
8. PROTECTION OF CONFIDENTIAL INFORMATION.
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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, unsusual, 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
14. NOTICES.
13
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.: Xxxxx Xxxxxxx Facsimile: 000-000-0000
Facsimile: (000) 000-000-0000
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
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
THE XXXXXX BIOMECHANICS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
17
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
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EXHIBIT A
STOCK OPTION AGREEMENT
19
