EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) made and effective as of the 6th day of March,
2006, by and between ENCORE MEDICAL CORPORATION, a Delaware corporation (the “Company”), and XXXXX
XXXXX (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
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 December 31, 2007 (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 dual capacity as President-Empi and
President — Compex Technologies (which entities are in the process of combining and integrating
their functions), 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 Chief Operating
Officer of the Company. It is understood that upon the integration of Empi and Compex
Technologies, there will be only one position that the Employee will be serving in. 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 the Chief Executive Officer of the Company, shall not be engaged in any other
business activity while in the employ of the Company. The Employee will be allowed to serve as a
director on the board of directors of at least one company as long as such company or companies do
not compete with the business of Encore.
1.4 Compensation
1.4.1 Salary. The Company shall pay to the Employee a base salary at a rate of not
less than Two Hundred Seventy-Five Thousand Dollars ($275,000) per year, or at such greater rate as
the Board of Directors 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. 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. It is agreed that as of January 1, 2007 or such sooner date as
Employee is responsible for the manufacturing functions for Empi based on
the determination of the Chief Operating Officer of the Company, Employee’s base salary will
increase to Three Hundred Thousand Dollars ($300,000) per year.
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, bonus and
stock plans, if any) as are established for all other executive 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.
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 thirty (30) 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, an amount equal to (i) if the termination is after one (1)
year from the effective date of this Agreement (a) one (1) year’s Base Salary and (b) an amount
equal to the bonus that the Employee earned in the prior fiscal year of the Company, in addition to
any accrued, but unpaid Base Salary, and (ii) if the termination is within one (1) year from the
effective date of this Agreement, an amount equal to the monthly Base Salary amount times the
number of months that Employee has served under this Agreement (i.e., if terminated seven (7)
months after commencement of this Agreement, then Employee will receive seven (7) months severance
pay). The Employee will have no further liability hereunder to the Company except pursuant to
Article 2 and Section 3.2 hereof. In the event such termination was with cause, the Company shall
only be required to pay the Employee, at the time of his discharge, an amount equal to any accrued,
but unpaid Base Salary. For purposes of this Agreement, a “discharge for cause” shall mean a
discharge resulting from Employee having (i) failed or refused to follow legal and reasonable
policies or directives established and previously given to Employee in writing by Company, (ii)
willfully failed to attend to his duties after ten (10) days prior written notice of failure to so
act, (iii) committed acts amounting to gross negligence or willful misconduct to the material
detriment of Company, or (iv) 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.
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ARTICLE 2
NON-COMPETITION AND DISCLOSURE OF INFORMATION
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; provided, however, said period of non-competition of
one year shall be reduced in the event termination without cause occurs within the first year of
the term of this Agreement to a period equal to the actual length of term of this Agreement.
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 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
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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
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, 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,
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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
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 Medical
Corporation, 0000 Xxxxxx Xxxx., Xxxxxx, Xxxxx 00000 ATTENTION: Chief Executive Officer. 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.
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
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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 except that Employee is still
bound by the non-compete, non-solicitation clauses contained in his Xxxxxx Medical Group, Inc.
Employment Agreement until August 1, 2007. 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 MEDICAL CORPORATION, a Delaware corporation |
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| By: | /s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx, | ||||
| Chief Operating Officer | ||||
| EMPLOYEE: |
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| /s/ Xxxxx Xxxxx | ||||
| XXXXX XXXXX | ||||
| Address: 0000 Xxxx Xxxxxx Xxxx, Xxxxxxx XX 00000 | ||||
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