AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is dated as of the
11th day of August, 2011, between Zynex, Inc., 0000 Xxxx Xxxxxxx Xxxxx, Xxxx Xxxx, XX 00000 (the
“Employer”) and Xxxxxx Xxxxxxxxx, 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, XX 00000 (the
“Executive”).
RECITALS
A. The Employer is a provider of non-invasive pain relief through the creation, distribution, and
marketing of pain relief products; EMG, EEG, sleep pattern, auditory and nerve conductivity
neurological diagnosis devices; and non-invasive cardiac monitoring devices (the
“Business”).
B. The Executive has been employed by the Employer pursuant to an Employment Agreement dated
February 1, 2004, as amended (the “Original Employment Agreement”). The Executive and the
Employer by this Agreement hereby amend and restate the Original Employment Agreement and herein
agree that the Original Employment Agreement is now terminated and replaced by this Agreement.
C. The Employer desires to employ the Executive under the terms and conditions below set forth.
The Executive desires to be so employed upon the terms and conditions below set forth.
D. The Executive acknowledges that his receipt of benefits under this Agreement, depends on, among
other things, the Executive’s willingness to agree to and abide by the Confidentiality and
Covenants Not to Compete or Solicit provisions in Sections 8 and 9 below.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and the mutual undertakings contained herein, it
is agreed as follows:
1. Term.
(a) Subject to the terms of this Agreement, this Agreement shall commence on August 11, 2011
and shall terminate on the earlier of December 31, 2014, the Executive’s death or
legally-determined disability, or the termination of this Agreement in accord with the provisions
contained in Section 6 below (the “Termination Date”).
(b) Subject to the terms of this Agreement, this Agreement may be extended for additional
one-year terms after the Termination Date on the same terms and conditions as herein set forth (the
“Extended Period”), if one party provides at least thirty (30) days’ written notice to the
other party prior to the Termination Date or end of the then-current Extended Period (the
“Extension Notification Date”) and the other party, within ten (10) days’ of receipt of
such notice, responds with a written acceptance agreeing to the Extended Period. Except when the
contrary is indicated, the phrase “the Term of this Agreement” shall henceforth be deemed
to include any Extended Period agreed to by the parties in accord with the terms of this Section
1(b).
2. Title. The Employer agrees to employ the Executive as Zynex, Inc.’s Chief
Executive Officer and President and the Executive accepts such employment.
3. Duties.
(a) The Executive shall render all services of the nature of the services that a Chief
Executive Officer would render to a company in the medical device area.
(b) During the Term of this Agreement, the Executive shall devote his full time, energy, skill
and best efforts to promote the Employer’s Business and affairs and to perform his duties
hereunder.
(c) The Executive shall report directly to the Board of Directors (“Board”) of the
Employer.
4. Compensation.
(a) Commencing on August 11, 2011, and continuing during the Term of this Agreement, the
Employer shall pay to the Executive for the loyal and consistent services provided to it hereunder
a salary of $385,000 per year. The Executive’s compensation shall be reviewed by the Board at
least annually for any appropriate adjustments at the end of each calendar year; however, the
Executive’s salary may not be reduced during the Term without the Executive’s written permission.
(b) The Executive shall also receive, after the end of each quarter during the Term of this
Agreement, bonus compensation, if any, based on the Employer’s performance or other criteria
established by the Board at least annually.
(c) The Employer will reimburse the Executive for all reasonable and necessary out-of-pocket
business, travel, and entertainment expenses incurred by the Executive in the performance of the
Executive’s duties and responsibilities to the Employer during the Executive’s employment under
this Agreement. Such reimbursement shall be subject to the Employer’s normal policies and
procedures for expense verification, documentation, and reimbursement.
5. Insurance and Benefits. During the Term of this Agreement, the Executive shall be
entitled to participate in all employee benefit plans and insurance programs which shall be
provided from time to time by the Employer to its employees (collectively, “Employee Benefit
Plans”) in accordance with the terms and conditions of such Employee Benefit Plans. During the
Term of this Agreement, the Executive will be provided with a company car with all costs and
reasonable expenses related to such company car to be paid by the Employer.
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6. Termination.
(a) This Agreement may be terminated by either party upon ninety (30) days’ advance written
notice of termination from one party to the other. This Agreement may also be terminated by the
Employer for Cause immediately upon written notice to the Executive. The term “Cause”, as
used herein, shall mean the loss of any license necessary for the Executive to
perform his duties hereunder, or any willful misconduct, malfeasance, gross negligence or
other like conduct adversely affecting the best interests of the Employer, including, without
limitation, (i) the failure or neglect by the Executive to perform his duties hereunder, (ii) the
violation or attempted violation of any provision hereof, (iii) the commission of any felony or
dishonest act, including, without limitation, any fraud against the Employer, any of the
affiliates, clients or customers of the Employer.
(b) If the Executive’s employment with the Employer is terminated by the Employer without
Cause and the Termination Date is prior to the expiration of the Term, then the Employer will,
subject to the conditions in Section 6(e), pay to Executive as severance pay an amount
equal to his then current monthly base salary for a period of one (1) year commencing in accordance
with Section 6(c).In addition, the Executive will be paid a pro rata share of any
quarterly bonus (Section 4(b)) he would have earned for the quarter in which he is
terminated. Notwithstanding anything herein to the contrary, in no event will the severance pay
available to the Executive under this Section 6(a) exceed the amount payable under Treas.
Reg. Section 1.409A-1(b)(9)(iii).
(c) Severance pay pursuant to Section 6(b) will be paid to the Executive in equal
installments in accordance with the Employer’s regular payroll schedule, less all legally required
and authorized deductions and withholdings, commencing on the first normal payroll date of the
Employer following the expiration of the applicable rescission periods provided by law applicable
to the release specified in Section 6(e) below and continuing for the applicable period
thereafter; provided, however, that if the Termination Date occurs before December 31 of any year,
any severance amounts that remain payable under Section 6(b) after the last normal payroll
date before March 15 of the following year shall be payable in a lump sum on March 15 of that
following year, less all legally required and authorized deductions and withholdings, and that if
such rescission periods have not then expired, the severance pay pursuant to Section 6(b) will be
forfeited and not paid to the Executive. Notwithstanding the foregoing, the Employer’s obligations
to make severance payments pursuant to this Section 6 shall cease effective upon the date
that the Executive accepts employment with another employer. The Executive shall notify the
Employer promptly upon his acceptance of such employment.
(d) If the Executive’s employment with the Employer is terminated for any reason after the
Term, then the Employer will pay to Executive, his beneficiary or his estate, as the case may be,
only Executive’s then-owed base salary through the Termination Date; payment for any accrued but
unused vacation time; reimbursement of reasonable, approved business expenses; and any vested
rights the Executive may have under any equity plans or agreements (including stock option and
restricted stock agreements equity plans) to the extent provided for in accordance with the terms
thereof.
(e) Notwithstanding the foregoing provisions of this Section 6, the Employer will not
be obligated to make any payments under Section 6(a) hereof unless (i) the Executive, if
reasonably requested by the Board and for no additional consideration, completes such transitional
duties as the Board may assign; (ii) the Executive signs a release of claims in favor of the
Employer and its affiliates (substantially in a form to be prescribed by the Board) on or before
expiration of the applicable consideration period specified therein, if any, and of the deadline
specified in Section 6(c), and all applicable consideration and rescission periods
provided by law have expired; and (iii) the Executive is in strict compliance with the terms of
this Agreement and any other agreements with the Employer that survive the termination of the
Executive’s employment.
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7. Return of Documents. On termination of this Agreement, or at any time upon the
request of the Board, the Executive shall return to the Employer all documents, including all
copies thereof, and all other property relating to the business or affairs of the Employer,
including, without limitation, customer lists, agents or representatives lists, commission
schedules and information manuals, letters, materials, reports, lists and records (all such
documents and other property being hereinafter referred to collectively as the
“Materials”), in his possession or control, no matter from whom or in what manner he may
have acquired such property. The Executive acknowledges and agrees that all of the Materials are
property of the Employer and releases all claims of right of ownership thereto.
8. Confidentiality. Except as authorized in writing by the Board or as necessary in
carrying out Executive’s responsibilities for the Employer, Executive will not at any time divulge,
furnish, or make accessible to anyone or use in any way, any confidential, proprietary, or secret
knowledge or information of the Employer that Executive has acquired or will acquire about the
Employer, whether developed by himself or by others, concerning (i) any trade secrets, (ii) any
confidential, proprietary, or secret designs, inventions, discoveries, programs, processes,
formulae, plans, devices, or material (whether or not patented or patentable) directly or
indirectly useful in any aspect of the business of the Employer, (iii) any customer or supplier
lists, (iv) any confidential, proprietary, or secret development or research work, (v) any
strategic or other business, marketing, or sales plans, systems or techniques, (vi) any financial
data or plans, or (vii) any other confidential or proprietary information or secret aspects of the
business of the Employer. Executive acknowledges that the above-described knowledge and
information constitute a unique and valuable asset of the Employer and represent a substantial
investment of time and expense by the Employer, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Employer would be wrongful and
would cause irreparable harm to the Employer. Executive will refrain from intentionally committing
any acts that would materially reduce, and shall take reasonable steps to protect, the value of
such knowledge or information to the Company. The foregoing obligations of confidentiality shall
not apply to any knowledge or information that (i) is now or subsequently becomes generally
publicly known, other than as a direct or indirect result of the breach by Executive of this
Agreement, (ii) is independently made available to Executive in good faith by a third party who has
not violated a confidential relationship with the Employer, or (iii) is required to be disclosed by
law or legal process. Executive understands and agrees that Executive’s obligations under this
Agreement to maintain the confidentiality of the Employer’s confidential information are in
addition to any obligations of Executive under applicable statutory or common law and any prior
agreements regarding this subject matter between Executive and the Company.
9. Covenants Not to Compete or Solicit.
(a) The Executive agrees that during the Term of this Agreement and for one (1) year
thereafter, he will not, directly or indirectly (whether as sole proprietor, partner, stockholder,
director, officer, employee or in any other capacity as principal or agent) compete with, or
participate in any business that competes with, the Employer’s Business, as then
conducted, anywhere in the world; provided that the Executive may invest in (i) the securities
of any business or enterprise (but without otherwise participating in the activities of such
business or enterprise) which are listed on a national or regional securities exchange or traded in
the over-the-counter market, and (ii) equity interests of the Employer.
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(b) The Executive undertakes that during the Term of this Agreement and for one (1) year
thereafter he will not, directly or indirectly (whether as a sole proprietor, partner, stockholder,
director, officer, employee or in any other capacity as principal or agent), do any of the
following: (i) hire, or attempt to hire for employment, any person who is an employee of the
Employer on the date of such termination of employment, or attempt to influence any such person to
terminate his or her employment by the Employer; or (ii) in any other manner interfere with,
disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Employer and
any of its employees, or disparage the business or reputation of the Employer to any such person.
(c) The Executive undertakes that during the Term of this Agreement and for one (1) year
thereafter he will not, directly or indirectly (whether as a sole proprietor, partner, stockholder,
director, officer, employee or in any other capacity as principal or agent), do any of the
following: (i) solicit, service or accept any actual or prospective accounts, clients or customers
of the Employer during the period of the Executive’s employment by the Employer; (ii) influence or
attempt to influence any of the accounts, customers or clients referred to in Subsection 9(c)(i) to
transfer their business or patronage from the Employer to any other person or company engaged in a
similar business; (iii) directly assist any person or company soliciting, servicing or accepting
any of the accounts, customers or clients referred to in Subsection 9(c)(i); or (iv) in any other
manner directly interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Employer and any of its accounts, customers or clients referred to in
Subsection 9(d)(i), or any other person, or disparage the business or reputation of the Employer to
any such person.
(d) Executive will not make any statement or remark to any person or entity that defames or
disparages the reputation, character, image, products, or services of Employer, or the reputation
or character of Employer’s employees, officers or directors. Employer, its employees, officers and
directors will not make any statement or remark to any person or entity that defames or disparages
the reputation, character, image, products, or services of Executive.
10. Enforcement of Covenants.
The parties acknowledge and agree that the covenants contained in Sections 8 and 9 are
essential elements of this Agreement that are required for the protection of the Employer’s
confidential, proprietary and trade secret information, its relationships with its clients and
customers and its goodwill, and that, but for the agreements of the Executive to comply with such
covenants, the Employer would not have entered into this Agreement. The parties further acknowledge
and agree that a breach by the Executive of the covenants contained in Sections 8 and 9 may result
in irreparable injury to the Employer for which there is no adequate remedy at law and that the
Employer shall be entitled to seek enforcement of the same by means of a temporary restraining
order and/or a preliminary or permanent injunction issued by any court having jurisdiction thereof.
In the event that the Executive breaches any of the covenants
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contained in Sections 8 and 9, the Employer shall be entitled to an accounting and repayment
of all profits, commissions and benefits the Executive receives in connection with such breach.
The Executive agrees to indemnify and hold harmless the Employer against all of its costs and
expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred in
connection with the enforcement of the covenants contained in Sections 8 and 9, except, with
respect to the enforcement of any such covenant by the Employer, to the extent that the Employer is
the prevailing party in any action or proceeding commenced by the Employer in connection therewith.
The covenants contained in Sections 8 and 9 shall survive the termination of this Agreement. The
remedies provided in this Section 10 shall be in addition to, and not in lieu of, any other
remedies and relief including damages to which the Employer may be entitled.
11. Employer’s Inventions. The Executive hereby sells, transfers and assigns to the
Employer or to any person, or entity designated by the Employer, all of the entire right, title and
interest of the Executive in and to all inventions, ideas, disclosures and improvements, whether
patented or unpatented, and copyrightable material, made or conceived by the Executive, solely or
jointly, or in whole or in part, during or before the term hereof which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or under construction or
development by the Employer or any subsidiary or (ii) otherwise relate to or pertain to the
business, functions or operations of the Employer or any subsidiary. The Executive shall
communicate promptly and disclose to the Employer, in such form as the Employer requests, all
information, details and data pertaining to the aforementioned inventions, ideas, disclosures and
improvements; and, whether during the term hereof or thereafter, the Executive shall execute and
deliver to the Employer such formal transfers and assignments and such other papers and documents
as may be required of the Executive to permit the Employer or any person or entity designated by
the Employer to file and prosecute the patent applications and, as to copyrightable material, to
obtain copyright thereon. Any invention by the Executive within one (1) year following the
termination of this Agreement shall be deemed to fall within the provisions of this Section
11 unless proved by the Executive to have been first conceived and made following such
termination.
12. Blue-Pencil. If a court of competent jurisdiction shall at any time deem the
terms of any of the covenants and undertakings of the Executive under Sections 8 and 9 herein too
broad, the court shall modify the offending provisions to make such provisions enforceable to the
maximum extent permitted by law and the other provisions of those Sections 8 and 9 shall
nevertheless stand. The court in each case shall reduce the period of restriction to a permissible
duration and shall modify any other provision deemed overly broad so that it is enforceable to the
maximum extent permitted by law.
13. Notices. Unless otherwise specifically provided herein, all notices, requests,
demands and other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return receipt requested,
with postage prepaid at the following addresses, and/or to such other addresses and/or persons
which either party may designate by like notice:
| (a) | If to the Executive, to: | ||
| Xxxxxx Xxxxxxxxx 0000 Xxxxxx Xxxxxx Xxxxx Xxxxxx Xxxx, XX 00000 |
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| (b) | If to the Employer, to: | ||
| Attn: Board of Directors Zynex, Inc. 0000 Xxxx Xxxxxxx Xxxxx Xxxx Xxxx, XX 00000 |
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| With a copy to: | |||
| Xxxxx Xxx, Esq. Xxxxxxx Coie, LLP 0000 00xx Xxxxxx, Xxxxx 0000 Xxxxxx, XX 00000 |
14. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Colorado without regard to conflict of law provisions. Any
disputes with respect to the interpretation of this Agreement or the rights and obligations of the
parties hereto shall be exclusively brought in any federal or state court of competent jurisdiction
located in the State of Colorado. Each of the parties waives any right to object to the
jurisdiction or venue of such courts or to claim that such courts are an inconvenient forum.
15. Additional Provisions.
(a) The Executive may not assign or delegate the performance of any of his rights and/or
obligations under this Agreement. The Employer may assign its rights and/or obligations under this
Agreement.
(b) This Agreement constitutes the entire agreement, representation and understanding of the
parties hereto with respect to the subject matter hereof, and no amendment or modification hereof
shall be valid or binding unless made in writing and signed by the parties hereto.
(c) All agreements between the parties related to the Executive’s employment by the Employer,
whether oral or written and including but not limited to the Original Employment Agreement, are
terminated and of no further force or effect.
(d) No waiver of any provision of this Agreement shall be valid unless the same is in writing
and signed by the party against whom it is sought to be enforced. No waiver of any default or
breach of this Agreement shall be deemed a continuing waiver or a waiver of any other breach or
default.
(e) Executive acknowledges that prior to the execution of this Agreement he had full
opportunity to consult with his independent attorneys and advisors as he deemed appropriate and he
fully understands the nature and scope of his rights and obligations hereunder.
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(f) The Employer may withhold from any amounts payable under this Agreement such federal,
state and local income and employment taxes as the Employer shall determine are required to be
withheld pursuant to any applicable law or regulation.
(g) The parties intend that this Agreement and the payments and other benefits provided
hereunder be exempt from the requirements of Section 409A of the Internal Revenue Code (“Section
409A”) to the maximum extent possible, whether pursuant to the short-term deferral exception
described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan
exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the
extent Section 409A is applicable to this Agreement, the parties intend that this Agreement comply
with the deferral, payout and other limitations and restrictions imposed under Section 409A. If
either party believes, at any time, that any payments and other benefits under this is not so
exempt or does not so comply, such party will promptly advise the other party and they each will
negotiate reasonably to amend the terms of this Agreement such that it is exempt or complies with
the most limited possible economic effect on the parties or to mitigate any additional tax or
interest (or both) that may apply under Section 409A if exemption or compliance is not practicable.
With respect to any payments and benefits under this Agreement to which Section 409A applies, all
references in this Agreement to the termination of the Executive’s employment are intended to mean
the Executive’s “separation from service,” within the meaning of Section 409A(a)(2)(A)(i).
Notwithstanding the foregoing, no provision of this Agreement shall be interpreted or construed to
transfer any liability for failure to comply with Section 409A from the Executive or any other
individual to the Employer or any of its affiliates.
(h) If any provision of this Agreement is invalid or unenforceable in any jurisdiction such
provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability, but the foregoing shall not render invalid or unenforceable in such jurisdiction
the remainder of this Agreement or the remainder of such provision or affect the validity or
unenforceability of any provision of this Agreement in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused this Agreement to be
executed on the date first above written.
| ZYNEX MEDICAL, INC. |
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| /s/ Xxxxxxx Xxxxxxx | ||||
| By: Xxxxxxx Xxxxxxx | ||||
| Its: Chief Financial Officer | ||||
| XXXXXX XXXXXXXXX |
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| /s/ Xxxxxx Xxxxxxxxx | ||||
| Xxxxxx Xxxxxxxxx | ||||
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