EXHIBIT 10.10 - SEPARATION AGREEMENT WITH XXXXXX X. XXXXXX
EXHIBIT A
SEPARATION AGREEMENT
This Agreement (the "Agreement) is hereby entered into by and between EMPI,
INC. (the "Company") and XXXXXX X. XXXXXX ("Executive") effective as of May 1,
1997.
RECITALS
Xxxxxx X. Xxxxxx is the founder and current Chairman of the Board and Chief
Scientific Officer of the Company. On May 1, 1993, the Company and Executive
signed an Employment Agreement with a five-year term under which Executive was
to serve as the Company's Chairman of the Board and as an officer of the
Company. The Board of Directors of the Company is deeply appreciative of the
leadership and many contributions of Executive, without which the Company would
not be the success it is today. The Board of Directors believes, however, that
from a corporate governance viewpoint, it is in the best interests of the
Company to effect an early termination of Executive's Employment Agreement and
to affirm a plan of succession. Accordingly, the Company has terminated this
Employment Agreement and in consideration of Executive's covenants hereunder and
Executive's agreement to release of claims set forth herein, the Company has
made provision for Executive to remain as a non-officer employee of the Company
through April 30, 1998, and for certain payments and other benefits to be paid
to Executive.
AGREEMENT
Now therefore for good and valuable consideration, the parties agree as
follows:
1. COMPANY. Company, as used herein, means Empi, Inc., its
successors and assigns, its subsidiaries, and its present and former
directors, officers, shareholders, employees and agents, whether in
their individual or official capacities.
2. EXECUTIVE. Executive, as used herein, means Xxxxxx X.
Xxxxxx and anyone who has or obtains legal rights or claims through
him.
3. RESIGNATIONS. Effective as of the Company's 1997 Annual
Meeting of Shareholders, Executive will resign as Chief Scientific
Officer of the Company. Effective as of the date of the Company's
1998 Annual Meeting of Shareholders, Executive will resign as Chairman
of the Board of the Company and assume the honorary position of
Chairman Emeritus until his term as a director of the Company expires
in 1999. Effective as of the Company's 1999 Annual Meeting of
Shareholders, Executive will resign as a director of the Company.
4. EMPLOYMENT AND DUTIES.
a. TERM AND DUTIES. From the date of the Company's
Annual Meeting through April 30, 1998, Executive will serve as
the Company's Director of Research, reporting to Xxxxxx
Xxxxxxxxx, the Company's Chief Executive Officer ("CEO").
Executive will perform such functions and duties as agreed upon
by the CEO and himself.
b. TIME COMMITMENT. The Company recognizes this
one-year employment period to be a time of transition and desires
to facilitate Executive's pursuit of other interests.
Accordingly, Executive will be on a full-time work schedule for a
maximum of three months, an 80% work schedule during the second
three months, a
E-24
60% work schedule during the third three months and a 40% work
schedule during the last three months.
c. COMPENSATION PAYMENTS. Executive will be paid at
his current salary throughout the one-year Employment Period and
he will continue to receive his regular automobile and cellular
telephone allowance during this period. Executive in his
discretion may determine when to take the salary payments, in
equal installments or in one or two lump sum payments as he
determines in his discretion. For 1997, Executive will continue
to participate in the Company's incentive bonus plans and will be
eligible for stock options granted under the Company's Incentive
Plan in accordance with the Employment Agreement between
Executive and the Company dated May 1, 1993 (the "Employment
Agreement"). The 1997 bonus payment, if any, will be paid to
Executive concurrently with the payment of bonuses to the other
participants in the Incentive Plan. All stock options granted to
Executive, if any, will be 100% vested upon grant. All other
benefits currently provided to Executive will continue until May
1, 1998. Benefits after May 1, 1998 will be as set forth in
Section 5 of this Agreement.
d. STOCK OPTIONS. All stock options currently held
by Executive will be deemed to be immediately exercisable in
accordance with Section 6(a)(iii) of his Employment Agreement.
All such stock options will be exercisable until May 30, 1998 in
compliance with the Company's stock option plan.
e. OTHER BENEFITS. Accrued vacation pay, if any,
will be paid in accordance with the Company's vacation pay
policies for retiring employees. Executive will continue to
participate in the Company's 401(k) Plan until April 30, 1998.
Executive's 401(k) benefits as of April 30, 1998 will be
allocated in accordance with the Plan terms.
5. CONSULTANT.
a. TERM AND DUTIES. From May 1, 1998 through April
30, 2001, Executive shall serve as a consultant to the Company
and shall perform such duties as are agreed upon by the CEO and
Executive.
b. TIME COMMITMENT. Executive agrees to provide
consulting services up to a maximum of 40 days during each twelve
(12) month period and such additional time as is agreeable to
Executive. Executive will perform such services at such
locations as the Company may reasonably request, but it is
understood that without Executive's consent he will not be
required to provide services for more than five consecutive days.
c. COMPENSATION. For the first year as a consultant,
Executive will continue to receive compensation equal to his
salary in effect immediately prior to beginning his consultancy.
In the second and third years, Executive will be paid $36,000 per
year. Executive in his discretion may determine when to take the
salary payments, in equal installments or in one or two lump sum
payments. For any consulting time in excess of 40 days,
Executive will be paid the sum of $1,200 per day or per partial
day.
d. BENEFITS. After May 1, 1998, Executive will
receive no further benefits from the Company except the following
insurance benefits. After May 1, 1998, the Company guarantees to
provide Executive and his eligible family members health
insurance coverage until the earliest date he becomes eligible
for Medicare, either through the continuation of present Company
health coverage or through the purchase of an individual health
insurance plan providing reasonably comparable benefits. The
costs of such health coverage will be assumed by the Company and
the Company will pay to Executive on an annual ("grossed up")
basis an amount to cover any tax costs if such insurance payments
are taxable income to him. The Company and Executive will comply
with COBRA requirements as applicable. The Company will continue
to pay Ernst & Young for providing tax services to Executive in
the years 1997, 1998, 1999 and 2000.
E-25
e. TERMINATION. Executive may terminate his
consulting arrangement with the Company at any time upon written
notice to the Company. The Company may not terminate the
consulting arrangement with Executive except for "Cause." Cause
shall be defined as termination of the Executive because of: (1)
gross misconduct, dishonesty or disloyalty; (2) willful and
material breach of this Agreement by Executive; or (3) conviction
or entry of a plea of guilty or nolo contendere to any felony or
gross misdemeanor or the entry of any final civil judgment in
connection with any allegation of fraud, misrepresentation,
misappropriation or any other intentional tort or statutory
violation.
6. INVENTIONS.
a. DEFINITIONS. For purpose of this Agreement:
(i) "Invention" means by invention,
enhancement, alteration, modification improvement,
discovery, new idea, formula, process, design, trade secret
or other useful technical writing, whether or not
copyrightable or patentable, relating to the existing or
reasonably foreseeable business of the Company.
(ii) "Proprietary Information" means any
information that is not generally known and relates to the
Company's existing or reasonably foreseeable business which
is not readily disclosed by inspection of the Company's
products and has been expressly or implicitly protected by
the Company from unrestricted use by persons not associated
with the Company, including trade secrets and Inventions.
Proprietary Information includes, but is not limited to,
information contained in or relating to the Company's
product designs, tolerances, manufacturing methods,
processes, techniques, treatment or chemical composition of
material, plant layout, tooling, marketing plans or
proposals, and customer information.
b. DISCLOSURE AND ASSIGNMENT. Executive agrees to
promptly disclose to the Company in writing complete information
concerning all Inventions and Proprietary Information made,
generated, discovered, developed, conceived, perfected or first
reduced to practice by Executive alone or in conjunction with
others, during or after working hours, while employed by the
Company that:
(i) Relate to any subject matter
pertaining to Executive's employment or consultancy;
(ii) Relate to or is directly or
indirectly connected with the business, products, projects
or Proprietary Information of the Company; or
(iii) Involve the use of any time, material
or facility of the Company.
Executive hereby acknowledges that all said Inventions and
Proprietary Information shall be "work made for hire" as defined in 17
U.S.C. Section 101 (1976), as amended, and as such, shall be the
exclusive property of the Company. Executive hereby assigns to the
Company all his right, title and interest in such Inventions and
Proprietary Information, except as otherwise specifically agreed by
the Company in writing.
c. NONDISCLOSURE OF PROPRIETARY INFORMATION. Unless
authorized in writing by an Officer or General Counsel for the
Company, Executive will not divulge or use any of the Proprietary
Information for his own or another's benefit, either during his
employment or afterwards, nor will Executive accept any
employment which would, by the nature of the position, inherently
involve the use or disclosure by him of Proprietary Information.
E-26
d. LIMITATION OF SECTION 6(B). The provisions of
Section 6(b) shall not apply to any Invention meeting all of the
following conditions:
(i) Such Invention was developed entirely
on Executive's own time;
(ii) Such Invention was made without the
use of any of the Company's equipment, supplies, facility or
trade secret information;
(iii) Such Invention does not relate (1)
directly to the business of the Company or (2) to the
Company's actual or demonstrably anticipated research and
development; and
(iv) Such Invention does not result from
any work performed by Executive for the Company.
e. ASSISTANCE OF EXECUTIVE. Executive agrees, at the
Company's expense, to give the Company all assistance it
reasonably requires to perfect, protect, and use its rights to
Inventions and Confidential Information. In particular, but
without limitation, Executive agrees to sign all documents, do
all things, and supply all information that the Company may deem
necessary or desirable to (i) transfer or record the transfer of
Executive's entire right, title, and interest in Inventions and
Proprietary Information; and (ii) enable the Company to obtain
patent, copyright, or trademark protection for Inventions
anywhere in the world.
f. CONTINUING OBLIGATIONS AFTER TERMINATION OF
EMPLOYMENT. The obligations of this Section 6 shall continue
beyond the termination of Executive's employment with respect to
Inventions conceived or made by Executive during the period of
Executive's employment with the Company and shall be binding upon
Executive's assigns, executors, administrators, and to other
legal representatives. In the event Executive is called upon to
render assistance to the Company pursuant to Section 6(c) after
termination of Executive's employment or consultancy with the
Company, the Company shall pay Executive reasonable compensation
for the assistance rendered and shall call upon Executive for
assistance at such reasonable times so as not to interfere with
Executive's new employment or business. For purposes of this
Agreement, any Invention or discovery relating to the business of
the Company upon which Executive files a patent application
within one (1) year after termination of Executive's employment
or consultant relationship with the Company shall be presumed to
have been made while Executive was employed by the Company or for
which he provided services as a consultant, subject to proof to
the contrary by good faith, written and duly corroborated records
establishing that such Invention or discovery was conceived and
made by Executive following termination of employment.
g. RECORDS. Executive shall keep complete, accurate
and authentic accounts, notes, data and records of all Inventions
in manner and form requested by the Company. Such accounts,
notes, data and records shall be the property of the Company, and
upon its request Executive shall promptly surrender the same to
the Company.
7. AGREEMENT NOT TO COMPETE.
a. RESTRICTIVE COVENANT. Executive agrees that until
May 1, 2001, he shall not, directly or indirectly, engage in
competition with the Company in any capacity (e.g., as an
advisor, principal, agent, partner, officer, director,
stockholder or employee) as follows:
1) For as long as Executive serves on
the Company's Board of Directors, Executive will not compete
with the Company in any way with the business of the Company
currently being conducted by the Company or which business
the Company intends to conduct as evidenced by a
E-27
business plan communicated to Executive and approved by the
Board of Directors.
2) During the period in which Executive
serves as a consultant to the Company, Executive will not
compete in any way with the business of the Company or which
the Company intends to conduct if information about its
intended business plans was made known to Executive in his
capacity as a director of or a consultant to the Company.
The Company agrees that Executive will not be
precluded from serving as an employee or consultant to a person
or company interested in implantable medical devices or any other
devices which the Company is not then manufacturing, marketing or
developing and are not included in a business plan which has been
communicated to Executive as a device which the Company intends
to manufacture, market or develop. If Executive is unsure about
the application of this Restrictive Covenant to his service as an
employee or consultant to another organization or his ownership
in another organization, he may request a waiver from the
Company's Corporate Governance Committee. If a waiver is
granted, it will be binding upon the Company and the Executive
will be free to work for or consult with the party named in the
request. If a waiver is not granted, Executive will not be
precluded from testing the validity of this Restrictive Covenant
in a court of law.
b. EQUITABLE REMEDIES. The payments to be made to
Executive through May 1, 2001 as set forth in this Agreement are
in part in consideration for Executive's agreement not to
compete. If Executive violates his agreement not to compete, the
Company shall have the right to terminate his payments and seek
injunctive relief prohibiting Executive from competing against
the Company.
c. GEOGRAPHIC EXTENT OF COVENANT. The obligations of
Executive not to compete shall apply to the entire United States.
d. NON-SOLICITATION. Executive further agrees that
through May 1, 2001, he will not solicit or encourage employees
of the Company to terminate their employment with the Company or
in any way interfere or attempt to interfere with the Company's
relationship with any current or potential customers of Empi.
e. CONSTRUCTION OF AGREEMENT NOT TO COMPETE. To the
extent any provision of this Section 7 shall be invalid or
unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and this Section 7 shall be
unaffected and shall continue in full force and effect. In
furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities
covered by, any provision of this Section 7 be in excess of that
which is valid and enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent
or activities which are validly and enforceably covered.
Executive acknowledges the uncertainty of the law in this respect
and expressly stipulates that this Section 7 be given the
construction which renders its provisions valid and enforceable
to the maximum extent (not exceeding its expressed terms)
possible under applicable laws.
8. RELEASES. Executive agrees that, on or before May 1, 1998,
he will execute a separate written "Release of Claims" which the
Company will provide and which will in substantial part provide as
follows:
a. RELEASE OF CLAIMS. Executive will release, agree
not to xxx, and forever discharge Empi, Inc., its subsidiaries,
successors and assigns, insurers, and affiliated and predecessor
companies, their successors and assigns, their insurers, and the
present and former owners, officers, directors, employees,
shareholders, consultants, and agents of any of them, whether in
their individual or official capacities, and the current and
former trustees or administrators of any pension or other benefit
plan applicable to the employees or former employees of Empi,
Inc., in their official and individual
E-28
capacities, from all claims and demands whatsoever, whether known
or unknown, in law or equity, Executive ever had, now have, or
shall have up to and through the date of his signing this Release
of Claims, including, but not limited to, any claims arising by
statute, in tort or contract, arising out of or in connection
with my employment by Empi, Inc., the termination of that
employment, or otherwise. This release includes, without
limiting the generality of the foregoing, any claims Executive
has or may have for wages, commissions, penalties, vacation pay
or other benefit, defamation, or improper discharge (based on
contract, at common law or under any federal, state or local
statute or ordinance prohibiting discrimination in employment,
particularly discrimination based on race, sex, national origin,
age, color, creed, religion, marital status, disability, or
sexual orientation, including but not limited to the Minnesota
Human Rights Act, Minn. Stat. Section 363.01 ET SEQ., Title VII
of the Civil Rights Act of 1964 as amended, 42 U.S.C. Section
2000e ET SEQ., and the Age Discrimination in Employment Act, 29
U.S.C. Section 621 ET SEQ.), or attorney's fees or costs.
b. NOTIFICATION OF RIGHTS. Executive is hereby
notified of his right to rescind the Release of Claims with
regard to claims arising under the Minnesota Human Rights Act,
Minnesota Statutes Chapter 363, within 15 days after Executive
signs this Release of Claims. In order to be effective, the
rescission must be in writing and delivered to Xxxxxx X.
Xxxxxxxxx, Empi, Inc., 000 Xxxxxxxx Xxxx, Xx. Xxxx, Xxxxxxxxx
00000-0000 by hand or mail. If delivered by mail, the rescission
must be postmarked within the required period, properly addressed
to Xxxxxx X. Xxxxxxxxx as set forth above, and sent by certified
mail, return receipt requested.
c. FULL RELEASE. Executive will have read the above
Release of Claims and understand it as a full and final release
of all claims he may have against Empi, Inc. and the other
entities and individuals covered by this Release of Claims. He
shall agree that he has had an opportunity to consult with an
attorney and that Executive will enter into this Release of
Claims knowingly and voluntarily.
9. CORPORATE INFORMATION. Executive agrees that he will not
remove any proprietary corporate information from the Company's
offices, including the office he occupied. The determination of what
information is proprietary will be in the discretion of the Company.
Subject to the foregoing, corporate information shall include, but not
be limited to, sales plans, customer information, employee
information, business correspondence and any other information which
is related to Empi, Inc. or its subsidiaries or their businesses. All
personal property of the Executive, property which is not owned by or
is not proprietary or confidential to the Company, will be returned to
Executive.
10. ASSIGNMENT. The obligations of Executive under this
Agreement may not be assigned by Executive. However, in the event of
Executive's mental or physical disability, incapacitation or death,
all remaining payments shall continue to be made to Executive's
spouse, or in the event of the death of the Executive's spouse, the
payments will be made to Executive's estate. As defined in this
Section 10, payments shall include, but not be limited to, Executive's
salary through April 1998, bonus payments for 1997 and consulting
payments through April 2001. Unexercised option rights may be
exercised by Executive's estate through May 1998. In the event of
Executive's death, the Company will provide health insurance benefits
to Executive's wife through the earliest date when Executive would
have been eligible for Medicare. The Company's rights and obligations
under this Agreement will inure to the benefit and be binding upon the
Company's successors and assignees. In the event that the Company is
acquired, merged or reorganized, Executive may choose to continue
consulting with the Company, but he will have no obligation to do so.
If he chooses to consult with the Company after its acquisition,
merger or reorganization, it will be on terms agreed upon with the
Company's new owners. Whether or not Executive chooses to enter in a
new consulting agreement with the new owners, the Company will honor
its payment obligations under Section 5 above.
11. SEVERABILITY. If a court rules that any part of this
Agreement is not enforceable, that part may be modified by the court
to make it enforceable. The parties expressly agree that the
restrictions contained in Sections 4, 6 and 7 are reasonable and
should be enforced to the maximum extent and scope possible.
E-29
12. DUE AUTHORIZATION. The Board of Directors of the Company
has approved this Agreement and authorized Xxxxxxx Xxxxxxx to execute
the Agreement on behalf of the Board of Directors and the Company.
13. GOVERNING LAW. Any disputes arising under this Agreement
shall be governed by the laws of the State of Minnesota.
14. FULL AGREEMENT. This Agreement contains the full agreement
of the parties and may not be modified, altered, or changed in any way
except by written agreement signed by both parties. Except as
expressly stated in this Agreement, the parties agree that this
Agreement supersedes and terminates any and all oral and written prior
agreements and understandings between the parties.
EMPI, INC.
Dated: May 12, 1997 By /s/ Xxxxxxx Xxxxxxx
----------------------- ------------------------------------------
Xxxxxxx Xxxxxxx, on behalf of the
Board of Directors of Empi, Inc.
Dated: May 12, 1997 /s/ Xxxxxx X. Xxxxxx
----------------------- ---------------------------------------------
Xxxxxx X. Xxxxxx
E-30
EXHIBIT B
AMENDMENT TO SEPARATION AGREEMENT
This Amendment to Separation Agreement (the "Amendment"), made and entered
into by and between EMPI, INC. (the "Company") and XXXXXX X. XXXXXX
("Executive") effective as of October 14, 1997, amends the Separation Agreement
entered into between the Company and Executive effective as of May 1, 1997 (the
"Separation Agreement").
RECITALS
Executive has been employed with the Company since May 1, 1997 pursuant to
the terms and conditions set forth in the Separation Agreement. Executive and
the Company now desire to amend certain terms and conditions of the Separation
Agreement and to set forth those amendments in writing.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties agree as follows:
1. Paragraph 3, the second sentence, of the Separation Agreement
(Resignations) is deleted in its entirety and replaced by the following
sentence:
Effective as of October 14, 1997 Executive will resign as Chairman of
the Board of Directors of the Company and assume the honorary position
of Chairman Emeritus of the Board until his term as a director of the
Company expires in 1999. This position is honorary only and as
Chairman Emeritus, Executive will not serve as a legal representative
of the Company. As Chairman Emeritus, Executive will serve at the
discretion of the Board of Directors.
2. Paragraph 4.a. of the Separation Agreement (Term and Duties) is
deleted in its entirety and replaced by the following paragraph:
a. TERM AND DUTIES. Effective as of October 14, 1997, through April
30, 1998, Executive will serve as a Senior Adviser to the
Company, reporting to Xxxxxx Xxxxxxxxx, the Company's Chief
Executive Officer ("CEO"). Executive will perform only such
functions and duties as reasonably agreed upon by the CEO and
Executive.
3. Paragraph 4.b. of the Separation Agreement (Time Commitment) is
deleted in its entirety and replaced by the following paragraph:
b. TIME COMMITMENT. Effective as of October 14, 1997 through April
30, 1998, Executive will maintain a work schedule sufficient to
perform only those functions and duties reasonably agreed upon by
the CEO and Executive pursuant to Paragraph 4.a. above. It is
understood that Executive will perform his work duties on the
Company's premises only if expressly requested by the CEO.
4. Paragraph 6.b. of the Separation Agreement (Disclosure and Assignment)
is clarified by inserting the phrase "or under contract as a consultant"
immediately after the phrase "while employed".
5. Paragraph 6.c. of the Separation Agreement (Nondisclosure of
Proprietary Information) is clarified by inserting the phrase "or consultant
relationship" immediately after the phrase "nor will Executive accept any
employment".
6. Paragraph 6.f., the heading and first sentence, of the Separation
Agreement (Continuing Obligations after Termination of Employment) are deleted
in their entirety and replaced by the following heading and sentence:
E-31
CONTINUING OBLIGATIONS AFTER TERMINATION OF EMPLOYMENT AND CONSULTANT
RELATIONSHIP. The obligations of this Section 6 shall continue beyond
the termination of Executive's employment and consultant relationship
with respect to Inventions conceived or made by Executive during the
period of Executive's employment and/or consultant relationship with
the Company and shall be binding upon Executive's assigns, executors,
administrators, and to other legal representatives.
7. Notwithstanding the amendments set forth above in Paragraphs 4, 5 and
6 of this Amendment, the Company and Executive do not desire to change the
spirit and the intentions of the parties as they were expressed in Paragraph 6
of the aforesaid Separation Agreement. The parties hereby reaffirm in "plain
English" that they understand Executive is required to disclose and assign to
the Company any invention or discovery which he made during his employment or
consultancy if: (i) the invention is related to the Company's business or its
actual or demonstrably anticipated research and development; or (ii) the
invention was made with the use of the Company's proprietary information or any
of its resources. Those inventions or discoveries made during this period which
are not related to the Company's business and which were not made with the use
of the Company's proprietary information or resources are the sole property of
Executive and need not be disclosed or assigned to the Company.
8. Paragraph 8.b., the first sentence, of the Separation Agreement
(Notification of Rights) is deleted in its entirety and replaced by the
following sentence:
Executive is hereby notified of his right to rescind the Release of
Claims with regard to claims arising under the Minnesota Human Rights
Act, Minnesota Statutes Chapter 363, within 15 calendar days of his
signing this Release of Claims, and with regard to his rights under
the federal Age Discrimination in Employment Act, 29 U.S.C. Section
621 ET SEQ., within 7 calendar days of his signing this Release of
Claims, rescission periods to run concurrently.
9. Paragraph 8.c., of the Separation Agreement (Full Release) is amended
by adding the following sentence immediately after the current second sentence:
Executive also shall agree that the Company informed him that he has
not less than 21 days from his receipt of the Release of Claims to
consider whether the terms are acceptable to him and that, by his
signature to the Release of Claims, he acknowledges that he has had
the benefit of the 21-day period.
10. Except as specifically provided herein, all other terms of the
Separation Agreement remain unchanged and are hereby reaffirmed by the Company
and Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year first above written.
EMPI, INC.
Dated: October 20, 1997 By /s/ Xxxxxxx Xxxxxxx
-------------------- -------------------------------
Xxxxxxx Xxxxxxx, on behalf of the Board of
Directors of Empi, Inc.
Dated: October 24, 1997 /s/ Xxxxxx X. Xxxxxx
-------------------- -------------------------------
Xxxxxx X. Xxxxxx
E-32
