Exhibit 10.(e)(e)
TERMINATION OF EMPLOYMENT AGREEMENT
AGREEMENT, dated March 7, 1997, between XXXXX X. XXXXX (the "Executive")
and XXXXX XXXXXX, INC., a Delaware corporation ("HSI").
The Executive is currently serving as the President and Chief Executive
Officer of Micro Bio-Medics, Inc. ("MBM") pursuant to an employment agreement
dated as of February 11, 1992, as amended (the "MBM Employment Agreement").
Concurrently with the execution and delivery of this Agreement, HSI and
MBM are entering into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which HSI Acquisition Corp., a wholly-owned subsidiary of HSI, will
be merged with and into MBM (the "Merger").
Concurrently with the execution and delivery of this Agreement and the
Merger Agreement, the Executive and HSI are entering into an Employment
Agreement, pursuant to which, at the Effective Time, as that term is defined in
the Merger Agreement, the Executive shall commence employment with HSI as its
Executive Vice President and as President of its medical products group (the
"HSI Employment Agreement").
To induce HSI to enter into the Merger Agreement and the HSI Employment
Agreement and in consideration of the agreements of HSI hereinafter set forth,
the Executive has agreed to terminate his MBM Employment Agreement on the terms
provided herein.
The parties agree as follows:
1. Termination of the MBM Employment Agreement
Effective as of the Effective Time, the MBM Employment Agreement
shall terminate and be of no further force or effect, and neither MBM, HSI nor
any of their respective Subsidiaries will have any obligation towards the
Executive under the MBM Employment Agreement except to pay to him any unpaid
base salary through the date on which the Effective Time occurs. Without
limiting the generality of the foregoing, the Executive shall not have any right
to receive any bonus under the MBM Employment Agreement in respect of MBM's 1997
fiscal year or any portion of such fiscal year occurring prior to the Effective
Time.
2. Payment
(a) In consideration of the termination of the MBM Employment
Agreement, and upon the effectiveness of the HSI Employment Agreement, HSI shall
cause MBM to pay to the Executive the aggregate amount of Three Million Dollars
($3,000,000) (the "Contract
Termination Obligation"), payable in five equal consecutive installments of Six
Hundred Thousand Dollars ($600,000) each. Subject to Section 2(b) hereof, the
first such installment shall be paid on the date on which the Effective Time
occurs, and the four remaining installments shall be paid on January 1 of each
of the four succeeding calendar years commencing after the Effective Time.
Interest shall accrue on the outstanding balance of the Contract Termination
Obligation from the date on which the Effective Time occurs to the date paid at
a rate per annum equal to the greater of (i) 6% or (ii) the prime rate of Chase
Manhattan Bank, less 2.50%, which rate shall be adjusted, as necessary, when
such prime rate changes; provided, however, that from and after the date the
aggregate unpaid amount of the Contract Termination Obligation is payable
pursuant to Section 2(c) such rate per annum shall be the lesser of the
foregoing rate plus 8% or the maximum rate permitted under applicable law.
(b) Notwithstanding anything in Section 2(a) to the contrary if, (i)
the Executive dies or becomes disabled, (ii) the Executive's employment is
terminated (1) by HSI without cause (as defined in the HSI Employment Agreement)
or (2) by the Executive for good reason (as defined in the HSI Employment
Agreement) or pursuant to Section 7(a)(i)(A) the HSI Employment Agreement, (iii)
a Significant Date shall have occurred (as that term is defined in the form of
agreement attached to Exhibit C to the HSI Employment Agreement), or (iv) HSI
shall not deliver the letter of credit provided for in the following sentence
under the circumstances set forth therein, then HSI shall cause MBM to pay to
the Executive the aggregate unpaid amount of the Contract Termination
Obligation, together with all accrued and unpaid interest thereon, in a lump sum
within 30 days after the date of such termination. In the event Xxxxxxx Xxxxxxx
shall cease to be the Chief Executive Officer of HSI, HSI shall cause to be
delivered to the Executive an unconditional irrevocable bank standby letter of
credit drawn on a member of the New York Clearinghouse Association in an amount
equal to the then aggregate unpaid Contract Termination Obligation.
(c) In the event that the Contract Termination Obligation becomes
subject to the tax (the "Excise Tax") imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any similar tax that may
hereafter be imposed under the Code, then HSI shall pay to the Executive the
amount of the Excise Tax that the Executive is obligated to pay in respect of
the Contract Termination Obligation plus an amount equal to the Executive's
income tax incurred with respect to such amount of the Excise Tax, provided
however that the maximum amount payable pursuant to this clause shall be an
amount equal to 50% of such Excise Tax, and provided further that the Executive
shall cooperate with HSI (at HSI's expense) in disputing the imposition of the
Excise Tax. If HSI determines in good faith that there is a basis for disputing
the amount of the Excise Tax imposed, HSI shall be entitled to direct any such
dispute, but shall indemnify the Executive against any additional Excise Tax for
which he may become liable as a result.
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3. Representations and Warranties.
(a) HSI represents and warrants to the Executive that it has full
corporate power to execute and deliver this Agreement. The execution, delivery
and performance of this Agreement has been duly authorized by HSI's Board of
Directors and does not conflict with or result in a breach of any provision of
(i) the Certificate of Incorporation, as amended, or Bylaws of HSI, (ii) any
material agreement, commitment or other instrument to which HSI is a party or by
which it is bound or (iii) any order, judgment or decree of any court or
arbitrator.
(b) The Executive represents and warrants to HSI that the execution
and delivery of this Agreement and the performance of his obligations pursuant
hereto do not conflict with, or result in a breach of any provisions of, any (i)
material agreement, commitment, or other instrument to which the Executive is a
party or by which the Executive is bound or (ii) order, judgment or decree of
any court or arbitrator.
4. Amendment and Modification; Waiver. This Agreement may be amended,
modified or supplemented only by the written agreement (referring specifically
to this Agreement) of the parties. The waiver by either party of any breach or
violation of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach or violation.
5. Notice. All notices required to be given under the terms of this
agreement shall be in writing and shall be deemed to have been duly given if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, as follows:
If to HSI, addressed to:
Xxxxx Xxxxxx, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
With a copy to:
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Executive, addressed to:
Xxxxx X. Xxxxx
000 Xxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
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With a copy to:
Otterbourg, Steindler, Houston & Xxxxx P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph.
6. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
7. Entire Agreement; Benefit. This Agreement constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, between the parties, with respect to the subject matter hereof
other than the HSI Employment Agreement. This Agreement shall inure to and shall
be binding upon the parties hereto, the successors and assigns of HSI and the
heirs and personal representatives of the Executive.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
provisions thereof relating to conflicts of law.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
10. Attorneys' Fees. If the Executive shall engage counsel to bring suit
against HSI and/or MBM to enforce his rights hereunder, the Executive shall be
entitled to be reimbursed by HSI for the reasonable fees and expenses of such
counsel incurred in connection with such suit if the Executive is the prevailing
party in such suit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
/s/ Xxxxx X. Xxxxx
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XXXXX X. XXXXX
XXXXX XXXXXX, INC.
By: /s/ Xxxx Xxxxxx
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Authorized Officer
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