EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 15th day of November,
1997, by and between BIONX IMPLANTS, INC., a Delaware corporation (the
"Employer"), and XXXXXXX X. X'XXXXX, an individual residing at 0000 Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (the "Employee"),
W-I-T-N-E-S-S-E-T-H
WHEREAS, Employer desires to employ Employee, and Employee desires to
accept such employment, all in accordance with the terms and conditions set
forth herein,
NOW THEREFORE, it is agreed as follows:
1. Employment. Commencing on the date hereof, Employer shall employ
Employee, and Employee shall serve as an employee of Employer, upon the terms
and conditions set forth herein.
2. Scope of Employment. During the term of this Agreement, Employee
shall devote his entire business time, attention and energy to the business, and
to seeking improvement in the profitability, of Employer. He shall serve as Vice
President, Finance and Administration, and Chief Financial Officer of Employer
and its subsidiaries and shall have the authority to perform and shall perform
all of the duties that are customary for the office of the Chief Financial
Officer, subject at all times to the control and direction of the Chief
Executive Officer and Board of Directors of the Employer, and shall perform such
services as typically are provided by the Chief Financial Officer of a
corporation and such other services consistent therewith as shall be assigned to
him from time to time by the Chief Executive Officer and the Board of Directors
of Employer. During the term of this Agreement, Employee shall not engage in any
other business activity which, in the reasonable judgment of Employer's Board of
Directors, conflicts with the duties of Employee hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage; provided.
however, that it is understood that this Section 2 shall not preclude Employee
from making passive investments in other companies.
3. Term.
3.1 The term of this Agreement shall commence on the date hereof and
continue until two years from the date hereof (the "Initial Term") and shall be
automatically renewable thereafter for consecutive terms of one year each (each,
a "Renewal Term") unless and until terminated as of the end of the Initial Term
or any such Renewal Term by either party giving notice in writing to the other
party not less than ninety (90) days before the end of the period in question
and subject, however, to earlier termination pursuant to this Article 3.
3.2 Notwithstanding the term of employment provided for in Section
3.1, this Agreement shall immediately terminate upon Employee's death or
Permanent Disability. For purposes of this Agreement, "Permanent Disability"
shall mean any physical or mental condition which materially interferes with the
performance of Employee's customary duties in Employee's capacity as Vice
President, Finance and Administration, and Chief Financial Officer of Employer
where such disability has continued for a period of ninety (90) consecutive days
or for a total of one hundred and eighty (180) days in any period of three
hundred and sixty-five (365) consecutive days.
3.3 Notwithstanding the term of employment provided for in Section 3.1
hereof, Employer shall have the right to terminate Employee's employment for
Cause, upon written notice to Employee. For purposes of this Agreement, "Cause"
shall mean (i) the conviction of Employee by a court of competent jurisdiction
of a felony or a misdemeanor which, in the reasonable judgment of Employer, is
likely to have a material adverse effect on the business of Employer, (ii)
Employee's material breach of this Agreement, or (iii) Employee's willful
disregard of lawful and proper written instructions of Employer's Chief
Executive Officer and/or Employer's Board of Directors.
3.4 Notwithstanding the term of employment provided for in Section 3.1
hereof, Employer shall have the right to terminate Employee's employment without
Cause, in the sole judgment of Employer, upon written notice to Employee.
3.5 Employee shall have the right to terminate this Agreement for Good
Reason, upon written notice to Employer. For purposes of this Agreement, "Good
Reason" shall mean Employer's material breach of this Agreement, provided that
Employee first provides Employer with written notice of such conduct and
Employer fails to make substantial efforts to correct such conduct within
fifteen (15) business days of its receipt of such notice. A termination of this
Agreement by Employer without Cause prior to the expiration of the term hereof
shall be treated for all purposes hereunder as if Employee had terminated this
Agreement for Good Reason.
3.6 In the event of Employee's termination pursuant to Section 3.2 or
Section 3.3 hereof, Employer shall only be obligated to pay Employee any unpaid
salary and bonus and benefits accrued to the date of termination, except as
otherwise expressly provided in any of Employer's written benefit plans.
3.7 In the event that Employee terminates this Agreement for Good
Reason, or Employer terminates this Agreement without Cause, in either case
prior to the expiration of the Initial Term, the Employer shall, until the first
anniversary of the date of Employee's termination of employment, (i) continue to
be obligated to make the salary payments described in Section 4 hereof and (ii)
continue to be obligated to provide benefits substantially comparable to the
benefits described in Section 7 hereof. In the event that Employee terminates
this Agreement for Good Reason, or Employer terminates this Agreement without
Cause, in either case during any Renewal Term, the Employer shall, until the six
month anniversary of the date of Employee's termination of employment, (i)
continue to be obligated to make the salary payments described in Section 4
hereof and (ii) continue to be obligated to provide benefits substantially
comparable to the benefits described in Section 7 hereof. While Employee shall
have no obligation to mitigate damages, any salary or other benefits actually
received by Employee from another employer (or, if Employee shall be
self-employed, 75% of the gross compensation received by Employee in such
capacity after exclusion of the first $10,000 so received) after such
termination shall be applied against amounts payable by Employer to Employee
pursuant to this Section 3.7.
3.8 The payments provided for in Sections 3.6 and 3.7, respectively,
above shall be Employee's sole and exclusive relief and shall be in lieu of any
other termination benefits or payments of any kind whatsoever which are hereby
expressly waived, for or in connection with such termination. Appropriate and
required withholding for Social Security and federal and state income taxes (or
comparable withholdings which may be applicable for employees outside the United
States), together with any other deductions authorized by Employee or required
by law or court order, shall be made and will reduce the gross amount to be paid
under this Agreement.
4. Salary. In consideration for Employee's services hereunder, until
December 31, 1997, Employer shall pay Employee a salary at a rate of $110,000
per year. Thereafter, Employee's annual salary rate shall be reviewed by
Employer's Board of Directors on an annual basis and shall not be less than
$110,000 per year.
5. Executive Bonus. In addition to the salary described in Section 4
above, Employee may receive bonuses pursuant to any executive bonus plan to be
developed by Employer.
6. Automobile Allowance. Employer will pay Employee an automobile
allowance of $500 per month.
7. Health Insurance. Employer will enroll Employee in Employer's
health insurance plan as is from time to time generally made available to other
employees of Employer.
8. Intentionally Omitted.
9. Other Benefits.
(a) Employee shall be entitled to three (3) weeks of paid vacation
each year to be taken at such times as are mutually convenient to Employee and
Employer.
(b) Employee shall receive from Employer such other benefits as shall
be comparable to benefits generally made available from time to time to other
employees of Employer.
10. Business Expenses. Employer will reimburse Employee, in accordance
with any Employer-established policies or guidelines, for all reasonable
business expenses actually incurred by Employee in promoting the business of
Employer, upon presentation by Employee, from time to time, of an itemized
account of such expenses.
11. Trade Secrets and Covenant Against Competition.
11.1 The trade secrets of Employer are hereby defined as including (i)
the processes utilized and to be utilized in Employer's business; (ii) the
methods and results of Employer's research; (iii) the Employer's business plans,
market analyses and other non-public financial information regarding Employer's
business; and (iv) any other confidential information or data relating to the
business of Employer and its affiliates which is not publicly known.
11.2 Employee agrees that he will not, either during his employment or
at any time after cessation of such employment, impart or disclose any of such
trade secrets to any person, firm or corporation other than Employer or its
affiliates, or use any of such trade secrets, directly or indirectly, for his
own benefit or for the benefit of any person, firm or corporation other than
Employer or its affiliates. Employee's obligations under this Section 11.2 shall
cease with respect to any such trade secret if such trade secret (i) was already
known to Employee at the time of disclosure, free of any obligation to keep it
confidential, (ii) was at the time of disclosure or thereafter became part of
the public domain through no fault of wrongful act of Employee, or (iii) was
subsequently disclosed to Employee without breach of this Agreement by a third
person who rightfully received and disclosed it without breaching any
confidentiality obligation to Employer. It is also understood by the parties
that Employee may be required to disclose trade secret information (a) pursuant
to subpoena or other court process, (b) at the express direction of any other
authorized government agency or (c) otherwise as required by law or regulation.
Disclosure of trade secret information or any part thereof in such circumstances
will not constitute a breach of the confidentiality provisions set forth in this
Agreement, provided that Employer notifies Employee in advance of any such
disclosure and cooperates with Employer in any efforts that Employer may make to
seek a protective order with respect to such disclosure.
11.3 In addition to the foregoing agreements relating to Employer's
trade secrets, during the term of this Agreement (including any renewals
thereof) and during the term of the "Post-Employment Period" (as defined
herein), Employee will not, without Employer's prior written consent, (i)
solicit any of the employees of Employer or Employer's affiliates for the
purpose of hiring or retaining any such employees, (ii) hire or retain or cause
to be hired or retained any of the employees of Employer or Employer's
affiliates or (iii) become involved in any manner, including without limitation
as an officer, director, employee, consultant, representative, partner, owner or
shareholder (except as a holder of less than a five (5%) percent equity interest
in a public entity) in any business located in the United States which is in the
business of inventing, developing, manufacturing, marketing. providing or
selling products competitive with the products that Employer or its subsidiaries
have developed, manufactured, marketed, produced or sold, or are in the process
of developing (and reasonably expect to bring to market within one (1) year
after the expiration of the Post-Employment Period or longer if required by the
F.D.A clearance or approval process), manufacturing, marketing, producing or
selling as of the date that Employee's employment terminates. For purposes of
this Agreement, the term "Post-Employment Period" shall mean the period
commencing on the date that this Agreement is terminated for any reason and
ending either (x) two years from the date of termination of this Agreement or
(y) if this Agreement is terminated by the Employee for Good Reason or by the
Employer without Cause, on the later of (a) two years from the date of such
termination or (b) the last date on which Employer makes salary payments to
Employee pursuant to Section 3.7 above.
11.4 Employee agrees that all memoranda, lab books, notes, records,
charts, formulae, specifications, lists business plans, analyses, financial
reports and other documents made, compiled, received, held or used by Employee
while employed by Employer, concerning any phase of Employer's business or its
trade secrets, shall be Employer's property and shall be delivered by Employee
to Employer upon termination of Employee's employment or at any earlier time on
the request of Employer.
11.5 Any invention or improvement made or conceived by Employee during
the term of Employee's employment by Employer (whether during or after working
hours) relating in any manner to the business of Employer, shall be promptly
disclosed in writing by Employee to Employer and shall be the sole property of
Employer. Upon Employer's request (whenever made), Employee shall execute and
assign to Employer all related applications for letters patent to the United
States and such foreign countries as Employer may designate and shall execute
and deliver to Employer such other instruments as Employer deems necessary. Any
invention or improvement made or conceived by Employee prior to termination of
Employee's employment shall be deemed to have been made or conceived during
Employee's employment hereunder, provided that such invention or improvement
relates to an aspect of Employer's business as of the date of termination of
Employee's employment.
11.6 Employee acknowledges that given his access to information
regarding Employer, the provisions of this Section 11 are reasonable and
necessary to protect Employer's business. Employee further acknowledges that he
has carefully reviewed the provisions of this Section 11, he fully understands
the economic consequences thereof, he has assessed the respective advantages and
disadvantages to him of entering into this Agreement and he has concluded that,
in light of his education, skills and abilities, the restrictions set forth in
this Section 11 will not prevent him from earning a living after the termination
of this Agreement. Employee agrees that each of the provisions of this Section
11, including, without limitation, the period of time, geographical area and
types and scope of the restrictions on Employee's activities specified herein,
are intended to be and shall be divisible. Employee further acknowledges the
reasonableness of these provisions as an integral part of the terms of his
employment. If any provision of this Section 11 (including any sentence. clause
or part thereof) shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made. In addition, if any particular provision
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing such provision as to such characteristic so that the
provision is enforceable to the fullest extent compatible with the applicable
law as it shall then appear.
11.7 As it would be very difficult to measure the damages which would
result to Employer from a breach of any of the covenants contained in this
Section 11, in the event of such a breach Employer shall have the right to have
such covenants specifically enforced by a court of competent jurisdiction.
Employee hereby recognizes and acknowledges that irreparable injury or damage
shall result to the business of Employer in the event of a breach or threatened
breach by Employee of the terms and provisions of this Section 11. Therefore,
Employee agrees that Employer shall be entitled to an injunction restraining
Employee from engaging in any activity constituting such breach or threatened
breach. Nothing contained herein shall be construed as prohibiting Employer from
pursuing any other remedies available to Employer at law or in equity for such
breach or threatened breach, including, but not limited to, recovery of damages
from Employee and, if Employee is still employed by Employer, terminating the
employment of Employee in accordance with the terms and provisions hereof.
12. Miscellaneous.
12.1 Entire Agreement. This instrument contains the entire agreement
of the parties with respect to the employment of Employee and supersedes all
prior agreements or arrangements between the parties concerning Employee's
employment by Employer and specifically supersedes and terminates any prior
agreement concerning severance to be paid to the Employee in the event of a
termination of his employment. This Agreement cannot be changed orally but only
by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
12.2 Severability. If any provision of this Agreement is declared
invalid by any legal tribunal, then such provision shall be deemed automatically
modified to conform to the requirements for validity as declared at such time,
and, as so modified, shall be deemed a provision of this Agreement as though
originally included herein. In the event that the provision invalidated is of
such a nature that it cannot be so modified, the provision shall be deemed
deleted from this Agreement as though the provision had never been included
herein. In either case, the remaining provisions of this Agreement shall remain
in effect.
12.3 Construction. The parties intend that this Agreement shall not be
construed against the party that has drafted all or any portion of this
Agreement.
12.4 Notice. Any notice or other communication required or permitted
under this Agreement shall be sufficient if in writing and delivered personally,
sent by facsimile, or by certified or express mail, or by overnight courier, and
shall be deemed given when so delivered except if mailed, in which case then two
days after mailing) to the parties as set forth below, unless changed n writing:
(a) to Employee at his residence address indicated above, or:
(b) to the Employer by notice sent to its principal headquarters
address in the United States, to the attention of the Chief Executive Officer,
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx, Sandler PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
12.5 Successors. The rights and obligations of Employee under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer, including any successors by merger or purchase or
otherwise.
12.6 Governing Law. This Agreement shall be interpreted in accordance
with and be governed by the laws of the State of Delaware.
12.7 Paragraph Headings. The paragraph headings used in this Agreement
are included solely for convenience and shall not affect or be used in
connection with the interpretation of this Agreement.
12.8 Arbitration. Any controversy, claim or dispute arising out of or
relating to this Agreement or its construction and interpretation may, at the
election of either the Employee or the Employer, be settled by arbitration in
New Jersey in accordance with the then-current rules of the American Arbitration
Association, and judgment upon the award rendered in such arbitration may be
entered in any court having jurisdiction thereof. In addition, any controversy,
claim or dispute concerning the scope of this arbitration clause or whether a
particular dispute falls within this arbitration clause may also be settled by
arbitration in accordance with the rules of the American Arbitration
Association.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BIONX IMPLANTS, INC.
By:/s/Xxxxx X. Xxxxxxxx
____________________________
Xxxxx X. Xxxxxxxx, President
/s/Xxxxxxx X. X'Xxxxx
______________________________
Xxxxxxx X. X'Xxxxx
