EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of November 19, 1999 and effective
as of September 1, 1999, is made by and between Empi Corp., a Minnesota
corporation (together with any successor thereto, the "Company"), and H. Xxxxxx
Xxxxxxxx (the "Executive").
RECITALS
A. It is the desire of the Company to assure itself of the services of
the Executive by engaging the Executive to perform such services under the terms
hereof.
B. The Executive desires to commit himself to serve the Company on the
terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto agree as
follows:
1. Certain Definitions.
(a) "Annual Base Salary" shall have the meaning set forth in
Section 4.
(b) "Board" shall mean the Board of Directors of the Company.
(c) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
(i) failure substantially to perform his duties hereunder,
other than any such failure resulting from the Executive's Disability,
after notice and reasonable opportunity for cure, all as determined by the
Board;
(ii) conviction of a felony or a crime involving moral
turpitude; or
(iii) fraud or personal dishonesty involving Company's
assets.
(d) "Company" shall have the meaning set forth in the preamble
hereto.
(e) "Compensation Committee" means the compensation committee of
the Board.
(f) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, or, (ii) if the
Executive's employment is terminated pursuant to Section 5(a)(ii) - (vi), the
date specified in the Notice of Termination.
(g) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a total of three
months during any six month period as a result of incapacity due to mental or
physical illness.
(h) "Executive" shall have the meaning set forth in the preamble
hereto.
(i) The Executive shall have "Good Reason" to terminate his
employment in the event that the Company
(i) fails to make any payment or provide any material
benefit hereunder,
(ii) commits a material breach of this Agreement, or
(iii) without the Executive's consent, materially diminishes
the Executive's position, duties or responsibilities to the Company,
in each case, if the Company does not cure such failure, breach or action after
notice and a reasonable opportunity to cure.
(j) "Incentive Compensation Plan" shall mean the annual
performance bonus plan as in effect from time to time, as adopted and
administered by the Board.
(k) "Notice of Termination" shall have the meaning set forth in
Section 5(b).
(l) "Term" shall have the meaning set forth in Section 2(b).
2. Employment.
(a) The Company shall employ the Executive, and the Executive
shall continue in the employ of the Company, for the period set forth in this
Section 2, in the position set forth in Section 3 and upon the other terms and
conditions herein provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period beginning on the effective date of
this Agreement and ending on December 31, 2002, unless earlier terminated as
provided in Section 5.
(b) The employment term hereunder shall automatically be extended
for successive one-year periods ("Extension Terms" and, collectively with the
Initial Term, the "Term") unless either party gives notice of non-extension to
the other no later than 90 days prior to the expiration of the then-applicable
Term.
3. Position and Duties.
(a) The Executive shall serve as the President and the Chief
Operating Officer of the Company with such customary responsibilities, duties
and authority as may from time to time be assigned to the Executive by the
Board. The Executive shall devote substantially all his working time and efforts
to the business and affairs of the Company.
(b) If elected or appointed thereto, and only for the duration of
such elected term or appointment, the Executive shall also serve as a director
of the Company and any of its subsidiaries and/or in one or more executive
offices of any of such subsidiaries, provided
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that the Executive is indemnified for serving in any and all such capacities on
a basis consistent with that provided by the Company to other directors of the
Company or similarly situated executive officers of any such subsidiaries.
4. Compensation and Related Matters.
(a) Annual Base Salary. During the Term the Executive shall
receive a base salary at a rate of $185,000 per annum ("Annual Base Salary"),
subject to increase as determined by the Compensation Committee and subject to
reduction only in connection with an across-the-board reduction applicable to
senior management of the Company generally.
(b) Bonus. During the Term, the Executive shall be eligible to
receive a bonus pursuant to the Company's Incentive Compensation Plan, the 1999
terms of which are attached hereto as Exhibit A. If the Company meets or exceeds
its goals under the Incentive Compensation Plan, the bonus payable to the
Executive shall be equal to the amount prescribed in the Incentive Compensation
Plan, and otherwise if such goals are not met, shall be in such amount, if any,
as the Board determines in its sole discretion.
(c) Benefits. The Executive shall be entitled to participate in
the other employee benefit plans, programs and arrangements of the Company
(including vacation) now (or, to the extent determined by the Board, hereafter)
in effect which are applicable to the senior officers of the Company, subject to
and on a basis consistent with the terms, conditions and overall administration
thereof.
(d) Expenses. The Company shall reimburse the Executive for all
reasonable travel and other business expenses incurred by him in the performance
of his duties to the Company, in accordance with the Company's documentation and
other policies with respect thereto.
(e) Directors' and Officers' Insurance. During the Term, the
Company will maintain for the benefit of the Executive (in his capacity as an
officer and/or director of the Company) directors' and officers' insurance;
provided, that the Company may terminate such insurance coverage for all
officers and directors, including the Executive, if a majority of the members of
the Board determine in good faith that such insurance is not available or is
available only at unreasonable expense.
5. Termination. The Executive's employment hereunder may be terminated
by the Company or the Executive, as applicable, without any breach of this
Agreement only under the following circumstances:
(a) Circumstances.
(i) Death. The Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. If the Company determines in good faith
that the Executive has incurred a Disability, the Company may give the
Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's
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employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive, provided that within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of his duties. The Executive shall continue to receive his
Annual Base Salary until the Date of Termination.
(iii) Termination for Cause. The Company may terminate the
Executive's employment hereunder for Cause.
(iv) Termination without Cause. The Company may terminate
the Executive's employment hereunder without Cause.
(v) Resignation for Good Reason. The Executive may
terminate his employment for Good Reason.
(vi) Resignation without Good Reason. The Executive may
resign his employment without Good Reason upon 60 days written notice to
the Company.
(b) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive under this Section 5 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a written
notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and specifying a Date of
Termination which, except in the case of termination for Cause, shall be at
least fourteen days following the date of such notice (a "Notice of
Termination").
6. Severance Payments.
(a) Termination without Cause or Resignation for Good Reason. If
the Executive's employment shall terminate without Cause (pursuant to Section
5(a)(iv)) or for Good Reason (pursuant to Section 5(a)(v)), the Company shall:
(i) pay to the Executive, for the eighteen month period
following the Date of Termination, in accordance with its regular payroll
practice his Annual Base Salary as in effect on the Date of Termination;
and
(ii) for the year in which the termination occurs, pay to
the Executive a pro-rated amount of bonus based on the Company's
year-to-date performance (as determined by the Board) in relation to the
performance targets set forth in the Incentive Compensation Plan; and
(iii) continue for 18 months the Executive's coverage under
the Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of Termination as
if the Executive were an active employee during such time, subject to
standard employee contributions by the Executive as are required under such
plans, and further subject to the Executive's election of "COBRA"
continuation coverage during such period. Following the expiration of the
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COBRA period, the Company may continue coverage under the Company's medical
and dental plans or provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs. All post-employment coverage under
such plans shall be co-extensive with COBRA continuation coverage required
by law, and shall cease if the Executive becomes eligible for coverage
under another employer's plans.
(b) Survival. The expiration or termination of the Term shall not
impair the rights or obligations of any party hereto which shall have accrued
hereunder prior to such expiration.
7. Competition.
(a) The Executive shall not, at any time during the Term or
during the 12-month period following the expiration of the term (or, if earlier,
the Date of Termination), without the prior written consent of the Board,
directly or indirectly engage in, or have any equity interest in, or be employed
by or manage or operate any person, firm, corporation, partnership, business or
product (whether as director, officer, employee, agent, representative, partner,
security holder, consultant or otherwise) that engages in any business or
develops, manufactures or sells any product which competes with any business or
product of the Company or any entity owned by it anywhere in the world;
provided, however, that the Executive shall be permitted to acquire a stock
interest in such a corporation provided such stock is publicly traded and the
stock so acquired is not more than five percent (5%) of the outstanding shares
of such corporation.
(b) In the event the terms of this Section 7 shall be determined
by any court of competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time or over too great a geographical area
or by reason of its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, and/or over the maximum geographical area as to which it may be
enforceable and/or to the maximum extent in all other respects as to which it
may be enforceable, all as determined by such court in such action.
8. Nondisclosure of Proprietary Information.
(a) Except as required in the faithful performance of the
Executive's duties hereunder or pursuant to subsection (c), the Executive shall,
in perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets of or relating to the Company,
including, without limitation, information with respect to the Company's
operations, processes, products, inventions, business practices, business
strategy, business development, finances, principals, vendors, distributors,
suppliers, customers, potential customers, manufacturing methods, sales methods,
marketing methods, costs, prices, contractual relationships, information
systems, regulatory status, compensation paid to employees or other terms of
employment, or deliver to any person, firm, corporation or other entity any
document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important,
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material and confidential proprietary information and trade secrets and affect
the successful conduct of the businesses of the Company (and any successor or
assignee of the Company).
(b) Upon termination of the Executive's employment with Company
for any reason and upon the Company's request, the Executive will promptly
deliver to the Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial documents, or any
other documents concerning, without limitation, the Company's operations,
processes, products, inventions, business practices, business strategy, business
development, finances, principals, vendors, distributors, suppliers, customers,
potential customers, manufacturing methods, sales methods, marketing methods,
costs, prices, contractual relationships, information systems, regulatory
status, compensation paid to employees or other terms of employment and/or which
contain proprietary information or trade secrets.
(c) The Executive may respond to a lawful and valid subpoena or
other legal process but shall give the Company the earliest possible notice
thereof, shall, as much in advance of the return date as possible, make
available to the Company and its counsel the documents and other information
sought and shall assist such counsel in resisting or otherwise responding to
such process.
9. Injunctive Relief. It is recognized and acknowledged by the
Executive that a breach of the covenants contained in Sections 7 and 8 will
cause irreparable damage to Company and its goodwill, the exact amount of which
will be difficult or impossible to ascertain, and that the remedies at law for
any such breach will be inadequate. Accordingly, the Executive agrees that in
the event of a breach of any of the covenants contained in Sections 7 and 8, in
addition to any other remedy which may be available at law or in equity, the
Company will be entitled to specific performance and injunctive relief.
10. Binding on Successors. This Agreement shall be binding upon and
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
11. Governing Law. This Agreement shall be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Minnesota.
12. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Notices. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Empi Corp.
000 Xxxxxxxx Xxxx
0
Xx. Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
With copies to:
The Carlyle Group
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxx
Phone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Executive, to him at the address set forth below
under his signature;
or at any other address as any party shall have specified by notice in writing
to the other parties.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
15. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
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16. Amendments; Waivers. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by the Executive and
the Chairman of the compensation committee of the Board. By an instrument in
writing similarly executed, the Executive or the Company may waive compliance by
the other party or parties with any provision of this Agreement that such other
party was or is obligated to comply with or perform, provided, however, that
such waiver shall not operate as a waiver of, or estoppel with respect to, any
other or subsequent failure. No failure to exercise and no delay in exercising
any right, remedy, or power hereunder preclude any other or further exercise of
any other right, remedy, or power provided herein or by law or in equity.
17. No Inconsistent Actions. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
18. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in St. Xxxx, Minnesota in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of Sections 7 or 8
of the Employment Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the necessity of the
Company's posting any bond. The fees and expense of the arbitrator shall be
borne by the Company.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
THE COMPANY
EMPI CORP.
By: ____________________________
Name:
Title:
THE EXECUTIVE
____________________________
Name: H. Xxxxxx Xxxxxxxx
Address: 000 Xxxxxxxx Xxxx
Xx. Xxxx, XX 00000
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