1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made and effective as of
the 17th day of August, 1995, by and between ENCORE ORTHOPEDICS, INC., a Texas
corporation (the "Company"), and XXXXX X. XXXXXXX (the "Employee");
In consideration of the mutual promises contained herein, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Employee agree as follows:
ARTICLE 1
EMPLOYMENT
1.1 Employment Term. The Company hereby employs the Employee for
a primary term commencing on the date set forth above and, subject to earlier
termination as provided in Section 1.5 hereof, ending five (5) years from such
date (the "Employment Term"). Employee agrees to accept such employment and to
perform the services specified herein, all upon the terms and conditions
hereinafter stated.
1.2 Duties. The Employee shall serve in the capacity as Vice
President of Sales of the Company, or in such other capacity as the Company may
in its sole discretion direct, and shall report to, and be subject to the
general direction and control of, the President of the Company. It is further
understood and agreed that any modification in or expansion of Employee's
duties hereunder shall not, unless specifically agreed in writing by Company,
result in any modification in, increase or decrease of Employee's compensation
referred to in Section 1.4 hereof.
1.3 Extent of Service. The Employee shall devote his full time,
attention, and energy to the business of the Company and, except as may be
specifically permitted by the Company and approved by either the President or
the Board of Directors of the Company, shall not be engaged in any other
business activity while in the employ of the Company.
1.4 Compensation
1.4.1 Salary. The Company shall pay to the Employee a base
salary at a rate of not less than One Hundred Thirty Thousand Dollars
($130,000) per year, or at such greater rate as the President of the Company
shall from time to time determine (the "Base Salary"). The Base Salary shall
be subject to review on no less than an annual basis, beginning September 1,
1998. Such salary is to be payable in installments in accordance with the
payroll policies of the Company in effect from time to time during the
Employment Term.
1.4.2 Other Benefits. The Employee shall be entitled to
such vacation days, sick days, insurance and other fringe benefit programs
(including pension, profit-sharing, and stock plans, if any) as are established
for all other employees of the Company, on the same basis as such other
employees are entitled thereto, it being understood that the establishment,
termination, or change of any such program shall be at the instance of the
Company, in exercise of its sole discretion, from time to time, and any such
termination or change in any such program shall not affect this Agreement.
2
1.4.3 Stock Options. Employee shall be granted an option to
purchase one hundred twenty-five thousand (125,000) shares of common stock of
the Company at the price of One and 40/100 Dollars ($1.40) per share, subject
to such vesting and other requirements as are set forth in the 1992 Stock
Option Plan of the Company and as are established by the Board of Directors of
the Company and the Stock Option Committee of the Board of Directors of the
Company.
1.4.4 Incentive Compensation Program. For the period
beginning with the commencement of this Agreement and ending on December 31,
1998, Employee shall be eligible to receive, as incentive compensation, an
amount equal to one percent (1%) of the Company's net sales of Company products
from "new business". For purposes of this provision, "new business" shall mean
and refer to sales of Company products generated in the United States by
representatives or distributors of the Company's products who were not
representatives or distributors of the Company's products as of the date of
this Agreement. "Net sales" shall mean and refer to the total amounts invoiced
to, and collected from, customers from sales of Company products, excluding
shipping costs, taxes, excise fees, finance costs, late fees, insurance, any
documentation charges and any discounts given to, or charged to, a customer,
and net of all sales commissions and royalties paid on such sales. The
compensation payable under this provision shall be payable quarterly, in
arrears. In the event that the amount paid to Employee in any calendar year
under this provision is greater than what would be otherwise due Employee under
the Employee Bonus Plan applicable to all other employees of the Company for
the same calendar year, then Employee shall not be eligible for payment under
the Employee Bonus Plan. In the event that the amount paid to Employee in any
calendar year under this provision is less than what would be otherwise due
Employee under the Employee Bonus Plan applicable to all other employees of the
Company for such calendar year, then Employee shall be paid, at such time as
payments to all other employees are made under the Employee Bonus Plan, the
difference between the amount due under the Employee Bonus Plan and the amount
paid pursuant to this provision.
1.5 Termination.
1.5.1 Termination by Employee. At any time after one (1)
year from the commencement of the Employment Term, Employee may terminate this
Agreement on thirty (30) days' prior written notice.
1.5.2 Termination by Company. Prior to the end of the
Employment Term, the Company may upon ten (10) days' prior written notice
discharge the Employee with or without cause at its sole option without any
further liability hereunder to the Employee or his estate; provided, however,
in the event such termination was without cause, the Company shall be required
to pay the Employee, at the time of his discharge, for one (1) year's Base
Salary, in addition to any accrued, but unpaid Base Salary. The Employee will
have no further liability hereunder to the Company except pursuant to Article 2
and Section 3.2 hereof. For purposes of this Agreement, a "discharge for
cause" shall mean a discharge resulting from Employee having (i) committed any
act involving moral turpitude, dishonesty, or fraud that, in the good faith
opinion of Company, causes a material harm to Company, (ii) failed or refused
to follow legal and reasonable policies or directives established and
previously given to Employee in writing by
-2-
3
Company, (iii) willfully failed to attend to his duties after ten (10) days
prior written notice of failure to so act, (iv) committed acts amounting to
gross negligence or willful misconduct to the material detriment of Company, or
(v) otherwise materially breached any of the terms or provisions of this
Agreement after ten (10) days prior written notice of such material breach and
failure to cure such breach. Employee shall be deemed to have been discharged
for cause upon delivery to Employee of a "Notice of Termination" stating the
"Date of Termination" and specifying the particulars of the conduct justifying
discharge for cause.
ARTICLE 2
NON-COMPETITION AND DISCLOSURE OF INFORMATION
2.1 Non-competition. Employee acknowledges that his services to
be rendered hereunder are of a special and unusual character which have a
unique value to Company, the loss of which cannot adequately be compensated by
damages in an action at law. In view of the unique value to Company of the
services of Employee for which Company has contracted hereunder, and because of
the confidential information to be obtained by or disclosed to Employee, and as
a material inducement to Company to enter into this Agreement, and to pay to
Employee the compensation referred to in Section 1.4 hereof, Employee covenants
and agrees that during Employee's employment hereunder and for a period of one
(1) year after he ceases to be employed by Company, Employee shall not (a)
directly or indirectly, solicit business from, divert business from, or attempt
to convert to other methods of using the same or similar products or services
as provided by Company, any client, account or location of Company with which
Employee has had any contact as a result of his employment by Company
hereunder; (b) engage in or carry on, directly or indirectly, either for
himself, as a member of a partnership, or as a stockholder (except as limited
partner or stockholder of less than one percent (1%) of the issued and
outstanding limited partnership interests or stock of a publicly held
partnership or corporation whose gross assets exceed $l,000,000), as an
investor, lender, guarantor, landlord, manager, officer, or director of any
person, partnership, corporation, or other entity (other than the Company or
its subsidiaries), or as an employee, agent, associate, broker, or consultant
of any person, partnership, corporation, or other entity (other than the
Company or its subsidiaries), any business (or segment of a business if such
business operates in more than one segment of the orthopedic industry) that
competes with any operations of the Company, as they exist at the time of
Employee's termination, within an one hundred (100)-mile radius of any
geographic area where Company is actually engaged in business, or maintains
sales or service representatives or employees; or (c) directly or indirectly,
solicit for employment or employ any employee of Company. In the event this
Agreement is terminated by the Company without cause, Employee may elect, by
providing written notice to the Company, to shorten the term of this
non-compete to six (6) months, provided, however, in that event, the Company's
obligation to pay severance pay to the Employee pursuant to Section 1.5.2 shall
be reduced to an amount equal to six (6) months base pay.
2.2 Disclosures of Information. The Employee acknowledges that in
the course of his employment by the Company, he will receive certain trade
secrets, programs, methods of operation, financial information, lists of
customers, and other confidential information and knowledge concerning the
businesses of the Company (hereinafter collectively referred to as
"Information") that the Company desires to protect. As a material inducement
to Company to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 1.4
-3-
4
hereof, Employee covenants and agrees that he shall not, at any time during or
following the term of his employment hereunder, directly or indirectly, divulge
or disclose, for any purpose whatsoever, any of such Information which has been
obtained by or disclosed to him as a result of his employment by Company. The
Employee further agrees that he will at no time use the Information in
competing with the Company. Upon termination of this Agreement, the Employee
shall surrender to the Company all lists, books, financial information,
records, literature, products, papers, documents, writings, and other property
produced by him or coming into his possession by or through his employment
relating to the Information, and the Employee agrees that all such materials
will at all times remain the property of the Company. In the event of a breach
or threatened breach by Employee of any of the provisions of this Article 2,
Company, in addition to and not in limitation of any other rights, remedies or
damages available to Company at law or in equity, shall be entitled to a
permanent injunction in order to prevent or to restrain any such breach by
Employee, or by Employee's partners, agents, representatives, servants,
employers, employees and/or any and all persons directly or indirectly acting
for or with him.
2.3 Accounting for Profits. Employee covenants and agrees that if
he shall violate any of his covenants or agreements under Article 2 hereof,
Company shall be entitled to an accounting and repayment of all profits,
compensation, commissions, remunerations or benefits which Employee directly or
indirectly has realized and/or may realize as a result of, growing out of or in
connection with any such violation; such remedy shall be in addition to and not
in limitation of any injunctive relief or other rights or remedies to which
Company is or may be entitled at law or in equity or under this Agreement.
2.4 Reasonableness of Restrictions.
2.4.1 Employee has carefully read and considered the
provisions of Article 2 hereof and, having done so, agrees that the
restrictions set forth in such Article (including, but not limited to, the time
period of restriction and the geographical areas of restriction set forth in
Article 2 hereof) are fair and reasonable and are reasonably required for the
protection of the interest of Company, its officers, directors and other
employees.
2.4.2 In the event that, notwithstanding the foregoing, any
of the provisions of Article 2 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof shall nevertheless continue to
be valid and enforceable as though the invalid or unenforceable parts had not
been included therein. In the event that any provision of Article 2 relating
to time period and/or areas of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or areas such court
deems reasonable and enforceable, said time period and/or areas of restriction
shall be deemed to become and thereafter be the maximum time period and/or
areas which such court deems reasonable and enforceable.
ARTICLE 3
EMPLOYEE INVENTIONS
3.1 Employee Inventions. Employee shall promptly disclose to the
Company or its designee any and all ideas, inventions, works of authorship
(including, but not limited to computer programs, software and documentation),
improvements, discoveries, developments, or innovations (hereinafter referred
to as "said inventions"), whether patentable or unpatentable,
-4-
5
copyrightable or uncopyrightable, made, developed, worked on, or conceived by
Employee, either solely or jointly with others, whether or not reduced to
drawings, written description, documentation, models, or other tangible form:
(a) during the Employment Term that relate to, or arise out of, any
developments, services, research, or products of, or pertain to the business
of, the Company and (b) for a period of six (6) months after termination of the
Employment Term, said inventions that relate to, or arise out of, any
developments, services, research, or products that Employee has been concerned
with during the term of his employment.
3.2 Assignment. Employee hereby assigns and agrees to assign to
the Company, its successors and assigns, Employee's entire right, title, and
interest in and to any of said inventions. All of said inventions shall
forthwith and without further consideration become and be the exclusive
property of the Company, it successors and assigns.
3.3 Cooperation. Employee shall, without further compensation, do
all lawful things, including, but not limited to, maintaining invention records
that shall be the property of the Company, rendering assistance, giving of
evidence and testimony, and executing necessary documents, as requested, to
enable the Company to file and obtain patents in the United States and foreign
countries on any of said inventions, as well as to protect the Company's
interest in any of said inventions.
ARTICLE 4
MISCELLANEOUS
4.1 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or on the date mailed,
postage prepaid, by certified mail, return receipt requested, or telegraphed or
telexed and confirmed if addressed to the respective parties as follows: (a) if
to the Employee to the address set forth below, and (b) if to the Company to
Encore Orthopedics, Inc., 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 ATTENTION: President. Either party hereto may designate a different
address by providing written notice of such new address to the other party
hereto.
4.2 Specific Performance. The Employee acknowledges that a remedy
at law for any breach or attempted breach of Section 1.3 and Article 2 of this
Agreement will be inadequate, and agrees that the Company shall be entitled to
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach, and further agrees to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive or any other equitable relief. In the event the Company brings
legal action to enforce its rights hereunder, the Employee shall pay all of the
Company's court costs and legal fees and expenses arising out of such action if
the Company prevails in such action.
4.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
-5-
6
4.4 Assignment. This Agreement may not be assigned by the
Employee. Neither the Employee nor his spouse shall have any right to commute,
encumber, or otherwise dispose of any right to receive payments hereunder, it
being the intention of the parties that such payments and the rights thereto
are nonassignable and nontransferable. This Agreement is only assignable by
the Company to a parent, subsidiary, successor or other affiliate of the
Company.
4.5 Binding Effect. Subject to the provisions of Section 4.4 of
this Agreement, this Agreement shall be binding upon and inure to the benefit
of the parties hereto, the Employee's heirs and personal representatives, and
the successors and assigns of the Company.
4.6 Governing Law. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of Texas.
4.7 Entire Agreement; Amendment. This Agreement contains the
entire understanding between the parties, and there are no agreements or
understandings among the parties except as set forth herein. The Employee
represents and warrants to the Company that at the time of execution of this
Agreement he is not a party to any other employment agreement. Employee
further represents and warrants that he neither has any proprietary information
of any other business nor is he providing any other business' proprietary
information to the Company. No alteration or modification of this Agreement
shall be valid except by subsequent written instrument executed by the parties
hereto. No waiver by either party of any breach by the other party of any
provision or condition of this Agreement in one circumstance shall be deemed a
waiver of such provision or condition in any other circumstances or be deemed a
waiver of any other provision or condition. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COMPANY:
ENCORE ORTHOPEDICS, INC.
By: /s/ XXXXX X. XXXXX
----------------------------
Xxxxx X. Xxxxx, President
EMPLOYEE:
/s/ XXXXX X. XXXXXXX
---------------------------------
XXXXX X. XXXXXXX
14819 Calaveras
Xxxxxx, Xxxxx 00000
-6-
