EXHIBIT 10.5
TECHNICAL ADVISORY AGREEMENT
THIS TECHNICAL ADVISORY AGREEMENT (this "Agreement") is entered into by and
between Empi Corp., a Minnesota corporation (the "Company") and Xxxxxx X.
Xxxxxxxxx, Xx. (the "Technical Advisor"), effective as of January 1, 2003 (the
"Effective Date").
RECITALS
A. The Company desires to engage the Technical Advisor to assist the
Company on the terms and conditions set forth herein;
B. The Company believes that it is in its best interest to engage the
Technical Advisor; and
C. The Technical Advisor desires to be engaged by the Company in the
capacity and on the terms and conditions described herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Scope of Engagement.
a. The Company agrees to retain the Technical Advisor for the period
set forth in Section 1(b) and the Technical Advisor accepts this engagement
to perform the services set forth in Section 2(a) on the terms and
conditions set forth herein.
b. The term of this Agreement (the "Term") shall be for the period
beginning on the Effective Date and ending on December 31, 2004 unless
earlier terminated as provided in Section 4.
2. Duties.
a. The Technical Advisor shall serve as a technical advisor to the
Company with the responsibilities, duties and authority set forth below and
additional responsibilities, duties and authority as may from time to time
be assigned to the Technical Advisor by the CEO. During the Term, the
Technical Advisor's duties shall include the following:
(i) Provide technical support in the development of projects
undertaken by the Company.
(ii) Provide industry expertise with respect to regulatory
positioning of the Company's products.
(iii) Serve as advisor and mentor to the CEO with respect to
operational and integration issues.
(iv) Review new products and technologies developed or purchased
by the Company.
(v) Evaluate products and technologies developed or owned by
target companies.
(vi) Attend at least one strategy session with TC Group, L.L.C.,
a Delaware limited liability company (the "Carlyle Group").
b. During the Term, it is expected that the Technical Advisor shall be
accessible as needed to advise the Company and perform the duties set forth
in Section 2(a).
c. The Technical Advisor acknowledges and agrees that the Technical
Advisor has a duty to act in the best interests of the Company. The
Technical Advisor agrees not to commit any act that would injure the
business, interests or reputation of the Company or any of the Company's
subsidiaries, affiliates or owners.
3. Compensation. As compensation for the Technical Advisor's services, the
Technical Advisor shall receive the following amounts:
a. Advisory Fee. Subject to Section 5, The Company shall pay the
Technical Advisor an advisory fee equal to $45,000 per year (the "Advisory
Fee") in 12 monthly installments for the performance of the duties set
forth in Section 2(a). The Technical Advisor acknowledges and agrees that
the monthly installments are subject to withholding.
b. Benefits. The Technical Advisor shall be entitled to participate in
the Company's group health plan, group dental plan and 401(k) plan to the
extent that the Technical Advisor is eligible to receive benefits under
such plans.
c. Expenses. The Company shall reimburse the Technical Advisor for all
reasonable expenses incurred during the Term for travel, lodging,
entertainment, and other business expenses incurred in connection with the
performance of the duties set forth in Section 2.
4. Termination. The Technical Advisor's engagement with the Company shall'
terminate upon the first to occur of the following events:
a. automatically upon the death or retirement of the Technical
Advisor;
b. automatically upon the occurrence of any of the following events:
(i) consummation of a merger or acquisition in which the Company is not the
surviving entity; (ii) consummation of a sale, transfer or other
disposition of all or substantially all of the assets of the Company; (iii)
the Carlyle Group or any affiliate of the Carlyle Group (collectively,
"Carlyle") cease to hold 50% of the shares of common stock of the Company;
or (iv) an underwritten public offering of shares of common stock of the
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Company pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
5. Effect of Termination. The sole liability of the Company under this
Agreement upon termination of the Technical Advisor's engagement shall be to (a)
reimburse the Technical Advisor pursuant to Section 3(c) for reasonable expenses
incurred by the Technical Advisor during the Term, and (b) pay any accrued but
unpaid portion of the Advisory Fee (appropriately pro-rated to the date of
termination) and (c) make the Technical Advisor eligible to continue the medical
and/or dental coverage for up to 18 months pursuant to the COBRA regulations and
to comply with any other obligations under this Agreement which expressly
survive termination of the Technical Advisor's engagement or pursuant to any
other written agreements between the Technical Advisor and the Company. The
Technical Advisor acknowledges and agrees that the Company is not obligated to
provide any severance payment to the Technical Advisor upon termination of this
Agreement, and that the Company is not obligated to pay the Technical Advisor
for any accrued, but unused vacation or sick leave upon termination of the
Technical Advisor's engagement unless required by state law.
6. Nondisclosure.
a. Except as required in the faithful performance of the Technical
Advisor's duties hereunder or pursuant to Section 6(c) below or as
expressly authorized by the Company in writing, the Technical Advisor
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 or Carlyle, including, without limitation, information with
respect to the Company's or Carlyle's business operations, processes,
products, inventions, business practices, finances, principals, vendors,
suppliers, customers, potential customers, marketing methods, costs,
prices, contractual relationships, regulatory status, compensation paid to
the Technical Advisor or other terms of engagement, or deliver to any
person, firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any confidential or
proprietary information or trade secrets. The parties hereby stipulate and
agree that as between them the foregoing matters are important and
material, and that the disclosure of confidential or proprietary
information or trade secrets will affect the successful conduct of the
businesses of the Company and/or Carlyle (and any successors or assignees
of the Company or Carlyle). Information that (i) is generally known by the
public, other than as a result of the Technical Advisor's acts or failure
to act; or (ii) the Technical Advisor is legally required to disclose, is
not subject to the restrictions of this Section 6(a).
b. Upon termination of the Technical Advisor's engagement for any
reason, the Technical Advisor will promptly deliver to the Company all
correspondence, drawings, manuals, letters, notes, notebooks, reports,
programs, plans, proposals, financial documents, budgets or board books or
any other documents concerning the customers, business plans, marketing
strategies, products and/or processes of the Company or Carlyle and shall
promptly destroy, purge or delete any confidential or proprietary
information or trade secrets which may have been recorded or otherwise
placed in any computer memory
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or storage device or incorporated in any documents or material which cannot
practicably be returned to the Company.
c. The Technical Advisor may respond to a lawful and valid subpoena or
other legal process but shall give the Company the earliest possible notice
thereof, and 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 the Company's counsel in resisting or
otherwise responding to the subpoena or other legal process. The Technical
Advisor shall use his best efforts to lawfully avoid or limit disclosure of
information requested pursuant to such subpoena or other legal process.
d. For purposes of this Section 6, the term "the Company" shall
include the Company and each of its affiliates.
7. No Competition.
a. Except as otherwise permitted herein, the Technical Advisor shall
not:
(i) at any time during the Term or during the two year period
following the expiration of the Term, without the prior
written consent of the Company, which consent may be granted
or withheld by the Company in its sole discretion, directly
or indirectly engage in, consult with, have any equity
interest in, or manage or operate any person, firm,
corporation, partnership or business (whether as director,
officer, employee, agent, representative, partner, security
holder, consultant, technical advisor or otherwise) that
engages in any business which competes with any business of
the Company anywhere in the world (as conducted during the
Term), provided, however, that the Technical Advisor shall
be permitted to acquire a stock or membership interest in
such an entity provided the entity is publicly traded and
the acquired interest is not more than two percent (2%)'6f
the outstanding shares or membership interests of the
entity; or
(ii) at any time during the Term or during the two year period
following the expiration of the Term, without the prior
written consent of the Company, solicit or accept if offered
to him, with or without solicitation, on his own behalf or
on behalf of any other person, the services of any person
who is an employee of the Company, nor solicit or hire any
of the Company's employees or encourage any of the Company's
employees to terminate employment with the Company.
b. In the event the terms of this Section 7 shall be determined by any
court of competent jurisdiction to be unenforceable because the provision
extends for too great a period of time, over too great a geographical area,
or for any other reason, the provision shall be interpreted to extend only
over the maximum period of time for which it may be
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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 the court interpreting
this Agreement.
c. For purposes of this Section 7, the term "the Company" shall
include the Company and each of its affiliates.
8. Injunctive Relief; Survival.
a. The Technical Advisor recognizes and acknowledges that a breach of
the covenants contained in Section 6 and Section 7 will cause irreparable
damage to the Company and Carlyle and their goodwill, the exact amount of
which will be difficult or impossible to ascertain, and that the remedies
at law for any breach will be inadequate. Accordingly, the Technical
Advisor agrees that in the event of a breach of any of the covenants
contained in Section 6 and Section 7, in addition to any other remedy which
may be available at law or in equity, the Company and Carlyle shall be
entitled to specific performance and injunctive relief.
b. The rights and obligations of the parties arising under Section 6
and Section 7, of this Agreement shall survive and will not be impaired by
the termination of the Technical Advisor's engagement with the Company.
9. Indemnification.
The Company agrees to indemnify the Technical Advisor for the costs of
defense actually and reasonably incurred by the Technical Advisor in connection
with any civil or criminal action, suit or proceeding brought against the
Technical Advisor, and any judgment rendered against the Technical Advisor with
respect to any action, suit or proceeding as a result of a decision made, or
action taken within the scope of this Agreement, provided that, in the Company's
view, the Technical Advisor acted in good faith and in the Company's best
interests. The Company shall not indemnify the Technical Advisor for any costs
of defense incurred by the Technical Advisor as a result of any acts or
omissions that the Company determines constitute fraud, intentional misconduct,
or gross negligence. The Company and the Technical Advisor agree that the
Company shall be entitled to select counsel to represent the Technical Advisor
with respect to any action, suit or proceeding referenced in this Section 9.
10. Binding on Successors. This Agreement shall be binding upon and inure
to the benefit of the Company, the Technical Advisor and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
11. Complete Agreement. This Agreement constitutes the complete agreement
and understanding concerning the technical advisory arrangement between the
parties and shall supersede all other agreements, understandings or commitments
between the parties as to the technical advisory arrangement.
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12. Prior Employment Agreement. The Technical Advisor acknowledges and
agrees that the Employment Agreement dated as of November 19, 1999, by and
between the Company and the Technical Advisor (the "Employment Agreement") will
expire by its terms on December 31, 2002. The Technical Advisor further
acknowledges and agrees that the Company or Carlyle will not be obligated to
provide any severance benefit to the Technical Advisor upon the expiration of
the Employment Agreement and that the Company will not be obligated to pay the
Technical Advisor for any accrued, but unused vacation or sick leave unless
required by state law.
13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement.
14. Notice. All notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed sufficiently given when
provided by facsimile, delivered by hand, or deposited in the mail, registered
or certified, postage prepaid, and addressed to the party entitled to receive
notice at the following address (or any address the parties may subsequently
designate in writing in accordance herewith):
The Company:
Empi Corp.
000 Xxxxxxxx Xxxx
Xx. Xxxx, XX 00000
Attn: Secretary
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
The Carlyle Group
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
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The Technical Advisor
Xxxxxx X. Xxxxxxxxx, Xx.
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
with a copy to:
______________________________
______________________________
______________________________
15. Waiver. No party shall be deemed to have waived any right, power or
privilege under this Agreement unless the waiver shall have been duly executed
in writing and acknowledged by the party to be charged with the waiver. The
failure of any party at any time to insist upon performance of any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
provision of this Agreement, nor in any way to affect the validity of this
Agreement or any part hereof. No waiver of any breach of this Agreement shall be
held to be a waiver of any subsequent breach.
16. Choice of Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the state of Minnesota without regard
to its conflict of laws principles.
17. Assignment. The Company may assign its rights and obligations under
this Agreement. The Technical Advisor may not assign this Agreement. This
Agreement is binding on the Technical Advisor, the Company and the Company's
successors and assigns whether by assignment, by operation of law or otherwise.
18. Amendment. This Agreement may not be amended or modified at any time
except by a written instrument executed by the Company and the Technical
Advisor.
19. Construction. This Agreement shall be deemed drafted equally by the
parties. The language contained in this Agreement shall be construed as a whole
and according to its fair meaning. Any presumption or principle that the
language is to be construed against any party shall not apply. The headings in
this Agreement are only for convenience and are not intended to affect
construction or interpretation. Any references to paragraphs, subparagraphs,
sections or subsections are to those parts of this Agreement, unless the context
clearly indicates to the contrary. Also, unless the context clearly indicates to
the contrary, (a) the plural includes the singular and the singular includes the
plural; (b) "and" and "or" are each used both conjunctively and disjunctively;
(c) "any," "all," "each," or "every" means "any and all," and "each and every";
(d) "includes" and "including" are each "without limitation"(e) "herein,"
"hereof," "hereunder" and other similar compounds of the word "here" refer to
the entire Agreement and not to any particular paragraph, subparagraph, section
or subsection; and (f) all pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the entities or persons referred to may require.
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20. Enforcement. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the Term
(a) the provision shall be fully severable; (b) this Agreement shall be
construed and enforced as if the illegal, invalid or unenforceable provision had
never comprised a portion of this Agreement, and (c) the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of the illegal, invalid or unenforceable
provision there shall be added automatically as part of this Agreement a
provision as similar in terms to the illegal, invalid or unenforceable provision
as possible and be legal, valid and enforceable.
(Signature Page to Follow)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE COMPANY:
EMPI CORP.
By: _____________________________________
Name:
Title:
THE TECHNICAL ADVISOR: XXXXXX X. XXXXXXXXX, XX.
By: _____________________________________
Name: Xxxxxx X. Xxxxxxxxx, Xx.
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