EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made as of July 31, 2002 by and between RME Acquisition
Corp., a Minnesota corporation (the "Company"), and H. Xxxxx Xxxxxx, Jr., a
resident of Tennessee ("Executive").
WHEREAS, the Company has acquired the business (the "Business") and
substantially all of the assets of Rehab Med Equip, Inc., a Tennessee
corporation ("RME"); and
WHEREAS, Executive has served as chairman of the board and chief executive
officer of RME; and
WHEREAS, the Company wishes to employ Executive in connection with the
Business, and Executive desires to accept that employment pursuant to the terms
and conditions of this Agreement;
NOW, THEREFORE, for the consideration described below, the parties agree
as follows:
I. Employment
1.1 Employment As Executive. The Company hereby agrees to employ Executive
as a General Manager of the Company for a three-year period commencing on the
date hereof, renewable automatically for successive one-year periods, unless
terminated by either Executive or the Company in accordance with Article III of
this Agreement (such actual period of employment being referred to as the
"Employment Period"). Executive accepts such employment pursuant to the terms of
this Agreement. Executive shall perform such duties and responsibilities as may
be determined from time to time by the Vice President of Marketing of Empi
Corp., the parent corporation of the Company ("Empi"), to whom he shall report.
1.2 Exclusive Services. Executive agrees to devote his full business time,
attention, and energy to performing his duties and responsibilities to the
Company under this Agreement during the Employment Period.
1.3 Base of Operations. Executive's principal base of operations for the
performance of his duties and responsibilities under this Agreement shall be the
offices of the Company in Collegedale, Tennessee, or within the area covered by
a 35-mile radius of such location.
Compensation, Benefits, and Perquisites
2.1 Salary. During the Employment Period, the Company shall pay Executive a
salary at the annual rate of $103,600, payable in accordance with the Company's
normal payroll payment schedule for salaried employees, but not less often than
monthly. The President of Empi may review the salary periodically and may in his
sole discretion increase it to reflect performance and other factors, although
the Company is not obligated to provide for any
increases. Executive's salary is subject to reduction only in connection with an
across-the board reduction in salaries applicable to senior management of the
Company and Empi generally.
2.2 Incentive Bonus. During the Employment Period, Executive shall be
eligible to earn an annual incentive bonus of up to 35% of salary, based on
meeting certain objectives, both on an individual and Company basis, established
by the Vice President of Marketing of Empi with Executive's input at the
beginning of each fiscal year of the Company.
2.3 Vacations. Executive shall be entitled to paid vacation of four weeks a
year, to be scheduled in accordance with the policies of the Company.
2.4 Employee Benefits. Executive shall be entitled to the benefits which
the Company generally provides to its other employees from time to time under
applicable Company plans and policies. Executive's participation in such benefit
plans shall be on the same basis as applies to other employees of the Company
and subject to the terms of applicable law, plan documents, and insurance
policies; provided, that the Company shall credit to Executive, for purposes of
eligibility to participate in, and for purposes of determining vesting under,
all benefit plans (other than the annual incentive bonuses for fiscal 2002), all
prior service of Executive recognized by RME prior to the date hereof. Executive
shall pay any contributions which are generally required of employees to receive
any such benefits.
2.5 Employment Taxes and Withholding. Executive recognizes that the
compensation and benefits provided by the Company under this Agreement may be
subject to federal, state, or local income taxes. All such taxes shall be the
responsibility of the Executive. To the extent that federal, state, or local law
requires withholding of taxes on compensation and benefits provided under this
Agreement, the Company shall withhold the necessary amounts from the amounts
payable to Executive under this Agreement.
2.6 Company Responsibility for Insured Benefits. In connection with this
Article II, the Company may provide certain benefits in the form of premiums of
insurance coverage. The Company is not itself promising to pay the benefit an
insurance company is obligated to pay under the policy the insurance company has
issued. If an insurance company does not or cannot pay benefits it owes to
Executive or his beneficiaries under the insurance policy, neither Executive nor
his personal representative or beneficiary shall have any claim for benefits
against the Company.
2.7 Expenses. Executive shall be entitled to receive reimbursement from the
Company (in accordance with the policies and procedures then in effect for the
Company's employees) for all reasonable travel and other expenses incurred by
him in connection with his services under this Employment Agreement.
2.8 Indemnification. The Company shall indemnify Executive and hold him
harmless from any and all claims and liabilities arising out of his employment
and service as an employee and officer, or in any other applicable capacity, to
the extent consistent with Company policies on indemnification for employees and
officers generally, including those in the
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Company's by-laws, insurance policies covering directors' and officers'
liability and other relevant documents and policies.
III. Termination of Executive's Employment
3.1 Termination of Employment. Except for termination of Executive's
employment by reason of Executive's disability, Executive's employment under
this Agreement may be terminated by Executive or the Company at any time for any
reason by providing written notice to the other party of such termination. If
Executive terminates this Agreement for any reason, he agrees to provide 90 days
notice prior to the effective date of termination (the "Termination Date"). This
Agreement shall terminate in its entirety immediately upon the death of
Executive.
3.2 Severance. (a) If Executive's employment hereunder is terminated by
the Company without cause (as defined below) or by Executive for good reason (as
defined below), the Company will pay to Executive (i) his salary through the
Termination Date and for a period of one year after the Termination Date and
(ii) his Prorated Incentive Bonus (as defined below) after the end of the fiscal
year in which termination occurs.
(b) If Executive's employment hereunder is terminated for any other
reason, including by Executive's resignation from his employment (other than for
good reason), the Company will pay to Executive his salary through the
Termination Date.
(c) Executive's salary paid pursuant to Section 3.2(a) may, at the
Company's option, be paid continuing on the normal payroll periods of the
Company or in one or more lump sums. Other than as expressly provided to the
contrary in this section or under applicable law, Executive's rights to
compensation and benefits shall cease on the Termination Date.
3.3 Definitions. (a) The "Prorated Incentive Bonus" shall mean Executive's
incentive bonus for the fiscal year during which the Termination Date occurs,
prorated to reflect the number of days during such year that Executive was
employed by the Company. The Prorated Incentive Bonus shall be calculated and
paid within 90 days after the end of the fiscal year, based on the actual
financial results of the Company.
(b) Termination "without cause" shall mean, and be limited to, termination
of Executive's employment by the Company other than as a result of (i) death,
(ii) disability, (iii) ??? or (iv) "cause", which is defined as and limited to
the following: (A) failure by or ??? of Executive to substantially perform
Executive's duties hereunder, or substantial neglect ??? duties, after receiving
written notice from the Company and failing to cure such failure, ??? or neglect
within 30 days, or other breach of this Agreement by Executive; (B) ??? of a
felony or a crime of moral turpitude by Executive or other public misconduct by
???, in any event which is materially detrimental to the reputation of the
Company; or (C) ??? or violation of any fiduciary duty or duty of loyalty owed
by the Executive to the ???.
(c) Termination or resignation by Executive for "good reason" shall mean,
and be ??? to, resignation following: (i) any action by the Company which
results in a material
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diminution or material adverse change in Executive's title, authority, duties or
responsibilities; (ii) any failure of the Company to pay Executive the salary
and any other amounts due hereunder as and when required or any other failure of
the Company to perform its material obligations to Executive hereunder in any
material respect if such failure continues uncured for ten (10) days after
written notice thereof, specifying the nature of such failure and requesting
that it be cured, as given by Executive to the Company; (iii) any action by the
Company requiring Executive to be based at any office or location other than the
office of the Company located in Collegedale, Tennessee; provided, however, that
this Section 3.3(c)(iii) shall not apply to a general relocation of the offices
of the Company to a location not more than 35 miles from the Company's current
office; or (iv) upon the occurrence of an Event of Default (as defined in that
certain Promissory Note dated the date hereof and issued by Empi to RME in the
principal amount of $1,000,000 (the "Note")), if (A) the effect of such
occurrence is to permit the acceleration of the Note, and the Note is
accelerated and immediately due and payable in accordance with its terms and (B)
Executive resigns his employment hereunder within 90 days following such Event
of Default.
3.4 Disability. If Executive has become unable, due to the condition of
his physical, mental or emotional health, to regularly perform the duties of his
employment hereunder for a continuous period of more than 120 consecutive days,
the President of Empi may, in his discretion, determine that Executive will not
return to work and terminate his employment under this Agreement by giving
Executive written notice of termination due to disability.
IV. Non-Competition, Confidentiality and Trade Secrets
4.1 Agreement Not to Compete. Executive agrees that, while he is employed
by the Company or its affiliate and until the later of (i) four years after the
date of this Agreement or (ii) one year after the Termination Date, he will not,
unless he receives the prior written approval of the Company, directly or
indirectly engage in any of the following actions:
(a) Own an interest in (except as provided below), manage, operate,
join, control, lend money or render financial or other assistance to, or
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant, independent contractor or otherwise, any entity whose
business, products or services compete directly or indirectly with those of the
Company or Empi, for which purpose a competing business is defined as one
engaged in the manufacturing, distributing or marketing of physical therapy
equipment and products for use in homes and clinics in the United States.
However, nothing in this subsection (a) shall preclude Executive from holding
less than one percent of the outstanding capital stock if any corporation
required to file periodic reports with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
the securities of which are listed on any securities exchange, quoted on the
National Association of Securities Dealers Automated Quotation System, or traded
in the over-the-counter market.
(b) (i) Induce or attempt to induce any person who is then an employee
of the company or any of its affiliates to leave the employ of the Company or
any of its affiliates, (ii) or any way interfere with the relationship between
the Company or any of its affiliates and any with employee of the Company or any
of its affiliates or (iii) employ or otherwise engage as an
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employee, independent contractor or otherwise any such employee or independent
contractor (including sales representatives) of the Company or any of its
affiliates.
(c) Intentionally solicit, request, advise or induce any person or
entity that was a customer, client or supplier of the Company or any of its
affiliates during the twelve (12) calendar month period immediately preceding
the Termination Date to cancel, curtail or otherwise adversely change its
relationship with the Company or such affiliate, in any manner or capacity.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten so as to be enforceable to the maximum extent permitted by law, and
Executive hereby consents, to the extent he may lawfully do so, to the judicial
modification of the scope of such restrictions in any proceeding brought to
enforce them.
4.2 Non-Disclosure of Information. During the period of his employment
hereunder, and at all times thereafter, Executive shall not, without the written
consent of the Company, disclose to any person, other than an employee of the
Company, or any of its affiliates or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by Executive of his
duties as an executive of the Company, except where such disclosure may be
required by law, any material confidential information obtained by him while in
the employ of the Company with respect to any of the Company's products,
technology, information, services, customers, methods, or plans unless and to
the extent that such confidential information is or becomes generally known to
and available for use by the public other than as a result of unauthorized
disclosure by Executive. Executive acknowledges that all of such confidential
information is a valuable, special, and unique asset, the disclosure of which
Executive acknowledges may be materially damaging to the Company.
4.3 Remedies. Executive acknowledges that the Company's remedy at law for
any breach or threatened breach by Executive of Section 4.1 or Section 4.2 will
be inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
4.4 Termination. Upon the occurrence of an Event of Default (as defined in
the Note), the effect of such occurrence is to permit the acceleration of the
Note, and the Note is accelerated and immediately due and payable in accordance
with its terms, then the restrictions set forth in Section 4.1(a) of this
Agreement shall terminate at the time Executive's employment with the Company
terminates and thereafter Executive shall have no further obligations under such
Section 4.1(a). All other terms and conditions of this Agreement will remain in
full force and effect.
V. Miscellaneous
5.1 Amendment. This Agreement may be amended only in a writing that is
signed by the parties.
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5.2 Entire Agreement. This Agreement contains the entire understanding of
the parties with regard to the employment of the Executive by the Company. There
are no other agreements, conditions, or representations, oral or written,
expressed or implied, with regard thereto. This Agreement supersedes all prior
agreements, promises, and representations relating to the employment of
Executive by the Company.
5.3 Assignment. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, Executive
may not assign any of his rights or obligations under this Agreement.
5.4 Successors. Subject to Section 5.3, the provisions of this Agreement
shall be binding upon the parties hereto, upon any successor to or assign of the
Company, and upon Executive's heir and the personal representative of Executive
or Executive's estate.
5.5 Notices. Any notice required to be given under this Agreement shall be
in writing and shall be delivered either in person or by certified or registered
mail, return receipt requested. Any notice by mail shall be addressed as
follows:
If to the Company, to:
RME Acquisition Corp.
c/o Empi Corp.
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Exec. Vice President and CFO
If to Executive, to:
H. Xxxxx Xxxxxx, Jr.
0000 Xxxxxxxxxxx Xxxx
XxXxxxxx, XX 00000
with a copy to:
Shumacker Xxxx Xxxxxxx & Xxxxxxxx, P.C.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
or such other addresses as either party may designate in writing to the other
party from time to time.
5.6 Waiver of Breach. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other
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provision of this Agreement or of any subsequent breach by such party of a
provision of this Agreement. No waiver by the Company shall be valid unless in
writing and signed by the President of Empi.
5.7 Severability. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions (or portions of the provisions) of this Agreement,
and the invalid, illegal, or unenforceable provision shall be deemed replaced by
a provision that is valid, legal, and enforceable and that comes closest to
expressing intention of the parties.
5.8 Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota, without giving effect to
conflict of law principles.
5.9 Headings. The headings of articles and sections herein are included
solely for convenience and reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
5.10 Counterparts. This Agreement may be executed by either of the parties
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the ??? set forth above.
RME Acquisition Corp.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Its: Executive Vice President and CFO
EXECUTIVE
/s/ H. Xxxxx Xxxxxx Jr.
--------------------------------------
H. Xxxxx Xxxxxx, Jr.
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