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EXHIBIT 10.2
EMPLOYMENT AGREEMENT dated as of June 1st, 2001 (the "Agreement"),
between dj Orthopedics, LLC, a Delaware limited liability company (the
"Company") and a wholly owned subsidiary of DonJoy, L.L.C., a Delaware limited
liability company ("DonJoy"), and Xxxx X. Xxxxxxx Xx. (the "Employee").
The execution and delivery of this Agreement by the Company and the
Employee is being made simultaneously with the closing of the transactions
contemplated by the Asset Purchase Agreement dated as of June 1st, 2001 (as the
same may be amended or otherwise modified from time to time, the "Purchase
Agreement," the terms defined therein being used herein as therein defined), by
and among the Company, Alaron Technologies, L.L.C., a California limited
liability company, Employee and Xxxxx X. Xxxxxx.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company shall employ the Employee, and the Employee accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending as provided in
Paragraph 4 (the "Employment Period").
2. POSITION AND DUTIES.
(a) During the Employment Period, the Employee shall serve as
Senior Vice President and shall have the usual and customary duties,
responsibilities and authority of a Senior Vice President subject to the power
of the board of managers of the Company (the "Board") (i) with the Employee's
consent, to expand or limit such duties, responsibilities and authority and (ii)
to override the actions of the Employee. The Employee shall perform his duties
principally in San Diego County, CA or such other location as the Employee and
the Board shall agree.
(b) (i) The Employee shall report to the President and Chief
Executive Officer and shall devote his best efforts and substantially all of his
active business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its Affiliates. The Employee shall perform his duties and
responsibilities to the best of his abilities in a diligent and professional
manner.
(ii) During the Employment Period, the Employee shall not
engage in any business activity which, in the reasonable judgment of the Board,
conflicts or substantially interferes with the duties of the Employee hereunder,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage.
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(c) The foregoing restrictions shall not limit or prohibit the
Employee from engaging in passive investment, inactive business ventures and
community, charitable and social activities not interfering with the Employee's
performance and obligations hereunder.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Employee's base salary
shall be $200,000 per annum, or such higher rate as the Board (excluding the
Employee if he should be a member of the Board at the time of such
determination) may designate from time to time (the "Base Salary"), which Base
Salary shall be payable in regular installments in accordance with the Company's
general payroll practices and subject to withholding and other payroll taxes. In
addition, during the Employment Period, the Employee shall be entitled to
participate in all employee benefit and insurance programs for which executive
employees of the Company are generally eligible.
(b) The Company shall reimburse the Employee for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement, which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and documenting
of such expenses.
(c) During the Employment Period, the Employee shall be entitled
to three (3) weeks paid vacation during each 12-month period worked, commencing
on the date hereof.
(d) At the sole discretion of the Board or compensation
committee, for each annual period of employment, the Employee may receive a
bonus if Executive achieves the performance goals set forth in a plan for the
Employee for such annual period of employment. Such plan will be consistent with
the overall plans and objectives for the Company.
4. TERM.
(a) The Employment Period shall end on the second anniversary of
the date of this Agreement, but may be extended annually for additional one year
terms by the mutual agreement of the Company and the Employee; provided,
however, that (i) the Employment Period shall terminate prior to such date upon
the Employee's resignation, death or Disability (as defined in the following
sentence), and (ii) the Employment Period may be terminated by the Company at
any time prior to such date for Cause (as defined below) or without Cause. For
purposes of this Agreement the term "Disability" means any long-term disability
or incapacity which (i) renders the Employee unable to substantially perform his
duties hereunder for 120 days during any 12-month period or (ii) would
reasonably be expected to render the Employee unable to substantially perform
his duties for 120 days during any 12-month period, in each case as determined
by the Board (excluding the Employee if he should be a member of the Board at
the time of such determination) in its good faith judgment; provided, however,
that if the Employee disputes any determination of Disability made by the Board
pursuant to clause (ii) above, the dispute shall be referred to three licensed
physicians practicing
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within a 100-mile radius of the city or township nearest to the Employee's place
of employment by the Company, one of whom shall be selected by the Board, a
second of whom shall be selected by the Employee and the third of whom shall be
selected by the two physicians selected by the Board and the Employee,
respectively, and the opinion of the majority of such physicians shall be the
determination of Disability, and shall be final and binding on both the Employee
and the Company.
(b) If the Employment Period is terminated by the Company
without Cause or by the Employee for Good Reason, the Employee shall be entitled
to receive only his Base Salary for a period equal to the greater of twelve (12)
months or the remaining term of the Employment Period following such
termination. Such payments of the Base Salary as severance will be made
periodically in the same amounts and at the same intervals as if the Employment
Period had not ended and the Base Salary otherwise continued to be paid unless
otherwise accelerated by the Board.
(c) If the Employment Period is terminated by the Company for
Cause, or by reason of the Employee's resignation, death or Disability, the
Employee shall be entitled to receive only his Base Salary, but only to the
extent such amount has accrued through the termination date.
(d) Except as otherwise required by law (e.g., COBRA) or as
specifically provided herein, all of the Employee's rights to salary, severance,
fringe benefits and bonuses hereunder (if any) accruing after the termination of
the Employment Period shall cease upon termination of the Employment Period. In
the event the Employee is terminated by the Company without Cause, the sole
remedy of the Employee and his successors, assigns, heirs, representatives and
estate shall be to receive the severance payments described in Paragraph 4(b).
In the event the Employee is terminated by the Company for Cause or by reason of
the Employee's death, Disability or resignation, the sole remedy of the Employee
and his successors, assigns, heirs, representatives and estate shall be to
receive the severance payment described in Paragraph 4(c).
For purposes of this Agreement, "Cause" means (i) failure by the
Employee to perform such duties as are reasonably requested by the Board as
documented in writing to the Employee, (ii) the Employee's willful disregard of
his duties or failure to act, where such action would be in the ordinary course
of the Employee's duties, (iii) the failure by the Employee to observe all
material Company policies and material policies of all Affiliates of the Company
generally applicable to executives of the Company and/or its Affiliates, (iv)
gross negligence or willful misconduct by the Employee in the performance of his
duties, (v) the commission by the Employee of any act of fraud, theft or
financial dishonesty with respect to the Company or any of its Affiliates, or
any felony or criminal act involving moral turpitude, (vi) the material breach
by the Employee of this Agreement, including, without limitation, any breach by
the Employee of the provisions of Xxxxxxxxx 0, Xxxxxxxxx 6 or Paragraph 7, or
(a) the Third Amended and Restated Operating Agreement of DonJoy, (b) the
Members' Agreement of DonJoy, or (c) any option agreement to which DonJoy and
the Employee may become a party, (vii) chronic absenteeism, or (viii) alcohol or
other substance abuse. For purposes of this Agreement, "Affiliates" means DonJoy
(or its successors or assigns) and all subsidiaries thereof.
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The Employee shall have "Good Reason" to terminate his employment in
the event that the Company is in material breach of a post-closing obligation
under the Purchase Agreement and such breach has not been cured in accordance
with the terms of the Purchase Agreement.
5. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION.
(a) The Employee shall not disclose or use at any time, either
during the Employment Period or thereafter, any Confidential Information (as
defined below) of which the Employee is or becomes aware, whether or not such
information is developed by him, except to the extent that such disclosure or
use is directly related to and required by the Employee's performance in good
faith of duties assigned to the Employee by the President and Chief Executive
Officer. The Employee will take all appropriate steps to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss and
theft. The Employee shall deliver to the Company at the termination of the
Employment Period, or at any time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
(as defined below) of the business of the Company or any of its Affiliates which
the Employee may then possess or have under his control.
(b) As used in this Agreement, the term "Confidential
Information" means information that is not generally known to the public and
that is used, developed or obtained by the Company in connection with its
business, including but not limited to (i) information, observations and data
obtained by the Employee while employed by the Company or any predecessors
thereof (including those obtained prior to the date of this Agreement)
concerning the business or affairs of the Company (or such predecessors), (ii)
products or services, (iii) fees, costs and pricing structures, (iv) designs,
(v) analyses, (vi) drawings, photographs and reports, (vii) computer software,
including operating systems, applications and program listings, (viii) flow
charts, manuals and documentation, (ix) data bases, (x) accounting and business
methods, (xi) inventions, devices, new developments, methods and processes,
whether patentable or unpatentable and whether or not reduced to practice, (xii)
customers and clients and customer or client lists, (xiii) copyrightable works,
(xiv) all production methods, processes, technology and trade secrets and (xv)
all similar and related information in whatever form. Confidential Information
will not include any information that has been published in a form generally
available to the public prior to the date the Employee proposes to disclose or
use such information.
6. INVENTIONS AND PATENTS.
The Employee agrees that all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service marks, trademarks, trade names, logos and
all similar or related information (whether patentable or unpatentable) which
relates to the Company's or any of its Affiliates' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Employee (whether or not
during usual business hours and whether or not alone or in conjunction with any
other person) while employed by the
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Company (including those conceived, developed or made prior to the date of this
Agreement) together with all patent applications, letters patent, trademark,
tradename and service xxxx applications or registrations, copyrights and
reissues thereof that may be granted for or upon any of the foregoing
(collectively referred to herein as, the "Work Product"), belong in all
instances to the Company or such Affiliate. The Employee will promptly disclose
such Work Product to the Board and perform (at the Company's expense) all
actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm the Company's ownership of such Work
Product (including, without limitation, the execution and delivery of
assignments, consents, powers of attorney and other instruments) and to provide
(at the Company's expense) reasonable assistance to the Company or any of its
Affiliates in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of interferences relating to any Work Product.
7. NON-SOLICITATION.
The Employee agrees that, for the period that includes (i) the
Employment Period and (ii) three (3) years after the termination of the
Employment Period (the "Non-Solicit Period"), the Employee shall not directly or
indirectly through another person or entity (i) induce or attempt to induce any
employee of the Company or any Affiliate of the Company to leave the employ of
the Company or such Affiliate, or in any way interfere with the relationship
between the Company or any such Affiliate, on the one hand, and any employee
thereof, on the other hand, (ii) hire any person who was an employee of the
Company, until six months after such individual's employment relationship with
the Company or any Affiliate of the Company has been terminated or (iii) induce
or attempt to induce any customer, supplier, licensee or other business relation
of the Company or any Affiliate to cease doing business with the Company or such
Affiliate, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation, on the one hand, and the
Company or any Affiliate, on the other hand.
8. ENFORCEMENT.
Because the Employee's services are unique and because the Employee
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security), or require the Employee to account for and pay over
to the Company all compensation, profits, moneys, accruals, increments or other
benefits derived from or received as a result of any transactions constituting a
breach of the covenants contained in this Agreement, if and when final judgment
of a court of competent jurisdiction is so entered against the Employee.
9. INSURANCE.
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The Company may, for its own benefit, maintain "keyman" life and
disability insurance policies covering the Employee. The Employee will cooperate
with the Company and provide such information or other assistance as the Company
may reasonably request in connection with the Company obtaining and maintaining
such policies.
10. SEVERANCE PAYMENTS.
In addition to the foregoing, and not in any way in limitation
thereof, or in limitation of any right or remedy otherwise available to the
Company, if the Employee violates any provision of the foregoing Xxxxxxxxx 0,
Xxxxxxxxx 6 or Paragraph 7, any severance payments then or thereafter due from
the Company to the Employee shall be terminated forthwith and the Company's
obligation to pay and the Employee's right to receive such severance payments
shall terminate and be of no further force or effect, if and when determined by
a court of competent jurisdiction, in each case without limiting or affecting
the Employee's obligations under such Xxxxxxxxx 0, Xxxxxxxxx 6 and Paragraph 7
or the Company's other rights and remedies available at law or equity.
11. REPRESENTATIONS AND WARRANTIES.
(a) The Employee hereby represents and warrants to the Company
that (i) the execution, delivery and performance of this Agreement by the
Employee does not and will not conflict with, breach, violate or cause a default
under any agreement, contract or instrument to which the Executive is a party or
any judgment, order or decree to which the Employee is subject, (ii) the
Employee is not a party to or bound by any employment agreement, consulting
agreement, non-compete agreement or confidentiality agreement or similar
agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by the Company and the Employee, this Agreement will
be a valid and binding obligation of the Employee, enforceable in accordance
with its terms.
(b) The Company hereby represents and warrants to the Employee
that (i) this Agreement has been duly authorized by all necessary limited
liability company action on the part of the Company, (ii) the execution,
delivery and performance of this Agreement by the Company does not and will not
conflict with, breach, violate or cause a default under any agreement, contract
or instrument to which the Company is a party or any judgment, order or decree
to which the Company is subject, and (iii) upon the execution and delivery of
this Agreement by the Company and the Employee, this Agreement will be a valid
and binding obligation of the Company.
12. NOTICES.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be delivered personally to the recipient,
delivered by United States Post Office mail, telecopied to the intended
recipient at the telecopy number set forth therefor below (with hard copy to
follow), or sent to the recipient by reputable express courier service (charges
prepaid) and addressed to the intended recipient as set forth below:
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If to the Company to:
dj Orthopedics, LLC
0000 Xxxxx Xx.
Xxxxx, XX 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
with a copy to:
X.X. Xxxxxx DJ Partners, LLC
c/o X.X. Xxxxxx Partners, LLC
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000.
If to the Employee, to:
Xxxx X. Xxxxxxx, Xx.
with a copy to:
Xxxxxxx Xxxx Seidenwurm & Xxxxx LLP
000 X Xx. Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (a) when
delivered, if personally delivered, sent by telecopier or sent by overnight
courier, and (b) on the fifth business day following the date posted, if sent by
mail.
13. GENERAL PROVISIONS.
(a) Severability. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
(b) Complete Agreement. This Agreement, those documents
expressly referred to herein and each of (i) DonJoy's Third Amended and Restated
1999 Option Plan and related option agreements, (ii) the Members' Agreement of
DonJoy, (iii) the Third Amended and Restated Operating Agreement of DonJoy,
(collectively, the "Management Related Documents") embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(c) Right of Set Off. In the event of a breach by the Employee
of the provisions of any of the Management Documents, the Company is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all amounts at any time held by the Company on
behalf of the Employee and all indebtedness at any time owing by the Company to
the Employee against any and all of the obligations of the Employee now or
hereafter existing under the Management Related Documents.
(d) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Employee and the Company and their respective successors, assigns, heirs,
representatives and estate; provided, however, that the rights and obligations
of the Employee under this Agreement shall not be assigned without the prior
written consent of the Company.
(e) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE
(WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION), THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN
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FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE
LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(f) Jurisdiction and Venue.
(i) The Company and the Employee hereby irrevocably and
unconditionally submit, for themselves and their property, to the
non-exclusive jurisdiction of any California state court or federal
court of the United States of America sitting in San Diego, California
and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or for recognition or
enforcement of any judgment, and the Company and the Employee hereby
irrevocably and unconditionally agree that all claims in respect of any
such action or proceeding may be heard and determined in any such
California state court or, to the extent permitted by law, in such
federal court. The Company and the Employee agree that a final judgment
in any such action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(ii) The Company and the Employee irrevocably and unconditionally
waive, to the fullest extent they may legally and effectively do so, any
objection that they may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this
Agreement in any California state or federal court sitting in San Diego,
California. The Company and the Employee irrevocably waive, to the
fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(iii) The Company and the Employee further agree that the mailing
by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful
service of process against them, without the necessity for service by
any other means provided by law.
(g) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Employee, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(h) Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) 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 instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
DJ ORTHOPEDICS, LLC
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: CEO/President
XXXX X. XXXXXXX, XX.
/s/ XXXX X. XXXXXXX, XX.
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Xxxx X. Xxxxxxx, Xx.
