Exhibit 10.12
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of November 20, 1996, is made by and
between XXXXX X. XXXXXX ("Executive") and SURVIVAL TECHNOLOGY, INC.
("Company"), a Delaware corporation.
RECITALS
A. The Executive and the Company have entered into an employment
agreement, dated March 2, 1993 ("Former Agreement").
B. The Company and Brunswick Biomedical Corporation ("BBC") have agreed
that, as a condition to consummation of the merger of BBC with and into the
Company ("BBC Merger"), the Company and the Executive shall have entered into
an Employment Agreement in substitution for the Former Agreement and an
employment agreement between the Executive and BBC ("BBC Employment
Agreement").
C. The Board of Directors of the Company ("Board of Directors") has
determined that it is in the best interest of the Company's shareholders that
appropriate steps should be taken to reinforce and encourage the continued
dedication of the Executive to the Executive's assigned duties.
D. In order to induce the Executive to remain in the employ of the
Company and to induce the Executive to give the Executive's continued
attention and dedication to the Executive's assigned duties, the Company
desires to enter into, and the Executive wishes to accept, this Employment
Agreement in substitution for the Former Agreement and the BBC Employment
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company and the Executive do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Whenever the following terms are used below in this Employment Agreement,
they shall have the meaning specified below, and no other, unless the context
clearly indicates
to the contrary. The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
1.1 Auditors. "Auditors" shall mean Price Waterhouse LLP, or an
independent certified public accounting firm that is duly selected by the
Board of Directors and is acceptable to the Executive.
1.2 Board of Directors. "Board of Directors" shall have the meaning
provided in the first recital of this Agreement.
1.3 Cause. "Cause" shall mean termination of employment with the
Company because of (i) the Executive's failure or refusal to perform
satisfactorily any duties reasonably required of the Executive by the Company
(other than by reason of disability), after reasonable demand for substantial
performance is delivered by the Company specifically identifying the manner
in which the Company believes the Executive has not performed his duties;
(ii) the commission by the Executive of a felony or the perpetration by the
Executive of a dishonest act against or breach of fiduciary duty toward the
Company; or (iii) any willful act or omission by the Executive which is
injurious in any material respect to the financial condition or business
reputation of the Company. For purposes of this Section 1.3, no act, or
failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his act or omission was in the best interests of the Company.
1.4 Change of Control. A "Change of Control" shall be deemed to have
occurred if (i) any person or group of persons (as defined in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended ("1934 Act"))
together with its affiliates, excluding employee benefit plans of the
Company, is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the 0000 Xxx) of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities; or (ii) during the term of this
Agreement, as a result of a tender offer or exchange offer for the purchase
of securities of the Company (other than such an offer by the Company for its
own securities), or as a result of a proxy contest, merger, consolidation or
sale of assets, or as a result of any combination of the foregoing,
individuals who at the beginning of any two-year period during the term of
this Agreement constitute the Board of Directors, plus new
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Directors whose election or nomination for election by the Company's
shareholders is approved by a vote of at least two-thirds of the Directors
still in office who were Directors at the beginning of such two-year period,
cease for any reason during such two-year period to constitute at least
two-thirds of the members of the Board of Directors; or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation or entity regardless of which entity is the
survivor, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and other than the
BBC Merger; or (iv) the shareholders of the Company approve a plan of
complete liquidation or winding-up of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets; or (v) any event which the Board of Directors determines
should constitute a Change of Control.
1.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6 Company. "Company" shall mean Survival Technology, Inc., a Delaware
corporation, its subsidiaries and affiliates, and any successor to its
business, whether direct or indirect, by purchase of securities, merger,
consolidation, purchase of all or substantially all of the Company's assets
or otherwise.
1.7 Date of Termination. "Date of Termination" shall mean (i) in the
case of the Executive's termination of employment by the Company for
Disability, thirty days after Notice of Termination is given, provided that
the Executive shall not have returned to the performance of the Executive's
assigned duties on a full-time basis during such thirty-day period; (ii) in
the case of termination of the Executive's employment by the Company for
Cause, the date of actual termination; or (iii) in the case of termination of
the Executive's employment by the Executive for Good Reason or termination
for any other reason, the date specified in the Notice of Termination, which
date shall not be less than thirty days after the date such Notice of
Termination is given.
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1.8 Disability. "Disability" shall mean absence from performance of
assigned duties for the Company on a full-time basis for six consecutive
calendar months as a result of incapacity due to medically documented
physical or mental illness; provided that the Executive shall not have
returned to the full-time performance of the Executive's duties within 30
calendar days of actual receipt of written Notice of Termination for the
reason of Disability. Such Notice of Termination may not be given prior to
the expiration of the six month period of Disability.
1.9 Executive. "Executive" shall have the meaning provided in the first
paragraph of this Agreement.
1.10 Good Reason. "Good Reason" shall mean the occurrence of any of the
following events without the Executive's express written consent:
(a) the assignment to the Executive of duties
inconsistent with the position and status of the
President and Chief Executive Officer of the
Company, or a substantial alteration in the nature,
status or prestige of the Executive's
responsibilities as President and Chief Executive
Officer of the Company from those in effect at the
date hereof (other than any such alteration
primarily attributable to the fact that the Company,
at the time of such alteration, is no longer a
publicly-held company);
(b) a reduction by the Company in the
Executive's pay grade or base salary as in effect at
the date hereof or as the same may be increased from
time to time during the term of this Agreement or
the Company's failure to increase (within 12 months
of the Executive's last increase in base salary) the
Executive's base salary in an amount which at least
equals, on a percentage basis, the average
percentage increase in base salary for all
executives of the Company having the same pay grade
as the Executive effected in the preceding 12
months;
(c) an involuntary relocation of the Executive
from the location contemplated in Section 3 hereof
or the breach by the Company of any other provision
of this Agreement; or
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(d) any purported termination of the employment
of the Executive by the Company which is not
effected according to the requirements of a Notice
of Termination as defined in Section 1.11 hereof.
1.11 Notice of Termination. "Notice of Termination" shall mean a
notice, in writing, to the Executive from the Company or to the Company from
the Executive, which indicates the specific termination provision enumerated
in this Agreement relied upon, and which sets forth in reasonable detail the
facts and circumstances alleged to provide a basis for termination of the
Executive's employment by the Company or by the Executive. Such notice must
be communicated to the Executive in accordance with Section 7.3 hereof.
1.12 Retirement. "Retirement" shall mean termination of the Executive's
employment on or after the date on which the Executive attains sixty-five
years of age or termination in accordance with any retirement agreement
entered into between the Executive and the Company.
1.13 Tax Counsel. "Tax Counsel" shall mean legal counsel, selected by
the Auditors and which is acceptable to the Executive and the Company, for
the purpose of rendering legal advice and services on tax issues arising
under this Agreement.
ARTICLE 2.
TERM
This Agreement shall be effective commencing on the date hereof and shall
continue in effect through November 30, 1999; provided, however, that
commencing on November 1, 1997 and on each November 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless
no later than August 1 of such year, the Company shall have given the
Executive notice that it does not desire to extend the term of this
Agreement; and provided, further, that if a Change of Control shall have
occurred during the term of this Agreement, then, notwithstanding such notice
by the Company not to extend, this Agreement shall continue in effect for the
lesser of (i) a period of 36 months beyond the then scheduled expiration of
this Agreement, or (ii) a period ending on the date of the Retirement of the
Executive. Notice by the Company pursuant to this Article 2 that it does not
wish to extend the term of this Agreement shall not constitute a Notice of
Termination and shall not give the Executive Good Reason to terminate his
employment with the Company.
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ARTICLE 3.
EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
continue to serve the Company on the terms and conditions set forth herein.
Except as may otherwise be agreed upon between the Company and the Executive,
the Executive shall serve the Company as President and Chief Executive
Officer of the Company. At all times, the Executive shall report directly to
the Board of Directors of the Company. The Executive shall devote
substantially all of his working time and efforts to the business and affairs
of the Company, except for reasonable time spent for service on the boards of
directors of other corporations, vacations and civic and charitable
activities, and shall continue to represent the Company within its industry.
The Executive shall, except as the Executive may otherwise agree, perform his
principal activities at the executive offices of the Company, subject to
required travel on the Company's business.
ARTICLE 4.
BENEFITS AND COMPENSATION
4.1 Base Salary. During the term of his employment hereunder, the
Company shall pay to the Executive, in approximately equal installments not
less often than twice per month, a base salary of not less than $325,000 per
year, as the same may from time to time be increased.
4.2 Benefit Plans and Arrangements. The Executive shall be entitled to
participate in and receive benefits under the Company's employee benefit
plans and arrangements in effect during the term of his employment hereunder.
4.3 Perquisites. During the term of his employment hereunder, the
Executive shall be entitled to receive fringe benefits ordinarily and
customarily provided by the Company, including without limitation
reimbursement (up to a maximum of $7,645 per year, as the same may from time
to time be increased by approval of the Compensation and Stock Option Plan
Committee or other appropriate body of the Company's Board of Directors) for
the cost of leasing an automobile.
4.4 Expenses. The Company shall promptly reimburse the Executive for
all reasonable travel and other business-related expenses related to the
Company's business actually paid or incurred by him in the performance of his
services under this Agreement, including without limitation the cost
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of two airline clubs and the annual fee for one major credit card.
ARTICLE 5.
TERMINATION
5.1 Death. The Executive's employment hereunder shall terminate upon
his death.
5.2 Disability. During any period within the term of this Agreement
that the Executive is or becomes subject to a Disability, the Executive shall
continue to receive the Executive's full base compensation and other benefits
at the rate then in effect until the Executive's employment is terminated.
After termination for Disability, benefits accruing to the Executive shall be
determined in accordance with the Company's disability policy as then in
effect or, in the event that such termination is subsequent to a Change in
Control, as in effect immediately prior to any Change of Control, as the
Executive may elect.
5.3 Cause. The Company may terminate the Executive's employment
hereunder for Cause. In the event that the Executive's employment with the
Company is terminated for Cause, the Executive shall receive the Executive's
full base compensation as earned through the Date of Termination at the rate
in effect at the time Notice of Termination is given. Following payment of
said amount and without impairing the Executive's rights under benefit plans
and arrangements and the Company's policies and procedures, the Company shall
have no further obligations to the Executive under this Agreement.
5.4 Retirement. In the event that the Executive's employment with the
Company is terminated by reason of the Executive's Retirement, the Executive
shall be entitled to the benefits under the Company's regular retirement
program, or, if a separate retirement agreement has been entered into between
the Executive and the Company, benefits shall be provided according to the
terms of that agreement.
5.5 Involuntary Termination. In the event that the employment of the
Executive shall be terminated during the term of this Agreement (i) by the
Company for any reason other than for Cause, Disability or Retirement or (ii)
by the Executive for Good Reason, then:
(a) unless the Executive shall elect instead to
receive the benefits available under the Company's
severance policy, the Executive shall be entitled to
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receive: (i) the Executive's full base compensation
as earned through the Date of Termination at the
rate in effect at the time Notice of Termination is
given; (ii) for a 24-month period after such
termination (or such lesser number of months up to
the date of the Executive's Retirement), life,
disability, accident and health insurance coverage
substantially the same as that which the Executive
received immediately prior to the Notice of
Termination or if such termination is subsequent to
a Change in Control, as the Executive received prior
to such Change of Control, as the Executive may
elect (collectively, the "Benefits"), provided,
however, that if, despite the provisions of this
Section 5.5, the benefits enumerated above shall not
be payable or provided to the Executive or his
dependents, beneficiaries or estate under the
Company's plans because he is no longer an employee
of the Company, the Company itself shall pay or
provide for payment of such benefits to the
Executive, his dependents, beneficiaries or estate;
and (iii) a lump sum payment ("Severance Payment")
from the Company to the Executive of a dollar amount
equal to 200% of the base compensation of the
Executive for the twelve-month period immediately
preceding the Notice of Termination;
(b) all options to purchase securities of the
Company then held by the Executive shall be
immediately exercisable, without regard to whether
such options are exercisable at such time pursuant
to the terms of the documents under which such
options were granted; and
(c) any securities of the Company then held by
the Executive that are subject to any restriction on
transfer, other than restrictions imposed only by
federal or state securities laws, shall lapse and be
of no further force and effect with the result that
the Executive shall be permitted to sell, transfer
or otherwise dispose of such securities without
regard to any such restrictions.
5.6 Tax Deductibility of Benefit Payments.
(a) It is intended that all amounts payable hereunder, together with all
other amounts payable to the Executive upon or in connection with a
termination of his employment, are reasonable compensation for the
Executive's service to the Company and its subsidiaries. Notwithstanding the
foregoing, should the Company
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determine, based upon the opinion of the Auditors with the advice and
assistance of Tax Counsel, that payment of any or all of the Severance
Payment and the Benefits together with any other amounts received by the
Executive that must be included in such determination, would result in the
payment of an "excess parachute payment" as defined in Section 280G of the
Code, then the Company will reduce the amount otherwise due and owing to the
Executive under this Agreement to the maximum amount that would permit a
determination that the Executive has not received an excess parachute payment
under the foregoing Code provision.
(b) The Company may reduce the Severance Pay and Benefits pursuant to
this Section 5.6 only if, within 60 days of the Executive's termination, it
provides the Executive with an opinion of the Auditors that the Executive
will be considered to have received "excess parachute payments" as defined in
Section 280G if he were to receive the full amounts owing pursuant to the
terms of this Agreement. Such opinion shall be based upon the proposed
regulations under Code Sections 280G and 4999 or substantial authority within
the meaning of Code Section 6661, and shall set forth with particularity the
smallest amount by which the payment due the Executive hereunder would have
to be reduced to avoid the imposition of any excise tax or the disallowance
of any deduction pursuant to Code Sections 280G and 4999 and shall
demonstrate the relation of such amount to the amounts set forth in paragraph
(a). The Executive shall, if he agrees with the determination of the
Company, notify the Company in writing of the payments and/or Benefits that
he wishes to have reduced in order to comply with the provisions of this
Section 5.6. In the event that the Executive fails to designate an order of
priority for the application of any such reduction, such reduction shall be
made in the order of priority determined by the Company. In the event that
the Executive does not agree with the opinion or calculation presented and he
is unable to resolve any dispute with the Company regarding such disagreement
within a period of 30 days of receipt of the opinion referenced above, the
Executive may take such other steps as he may deem advisable to enforce his
position.
5.7 Underpayment of the Severance Payment. In the event that the
initial determination of the Auditors and Tax Counsel results in a payment to
the Executive of a smaller Severance Payment than the Executive was actually
entitled to receive (as determined by the Auditors and Tax Counsel based on
controlling precedent), such underpayment shall be promptly disbursed to the
Executive or for the
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Executive's benefit together with interest at the prime rate as announced
periodically by The Chase Manhattan Bank.
5.8 Legal Fees and Expenses. If litigation shall be instituted to
enforce or interpret any provision hereof and the Executive shall prevail,
the Company will reimburse the Executive for his reasonable attorneys' fees
and disbursements incurred in such proceeding and will pay prejudgment
interest at the legal rate then in effect on any money judgment or award
obtained by the Executive in such proceeding.
5.9 No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Agreement be reduced or offset by any compensation earned by the
Executive as a result of employment by another employer or by retirement
benefits after the Date of Termination or otherwise. Benefits payable
pursuant to Section 5.5(a)(ii) of this Agreement shall cease to the extent
that the Executive is entitled to receive such benefits pursuant to the
benefit plans of another employer of the Executive.
ARTICLE 6.
NON-COMPETITION; NON-DISCLOSURE
6.1 The Executive agrees that, while he is employed by the Company, he
will not directly or indirectly engage or participate in, as an owner,
partner, shareholder, officer, employee, director, agent or consultant, any
business that directly or indirectly competes with the Company or any of its
subsidiaries or affiliates, and, further, that he will not make any
investments in any business that competes with the Company. The Executive
further agrees that he will not at any time, except in the performance of his
duties for the Company, directly or indirectly disclose any trade secret or
confidential information that he learns by reason of his association with the
Company. The Executive acknowledges that all business records, papers,
documents and other matters created, collected or made by him in the
performance of his service for the Company shall remain the exclusive
property of the Company. The agreements and acknowledgments in this
paragraph are in addition to those contained in the Employment Agreement
incorporated by reference in Section 6.2.
6.2 The Executive ratifies and confirms the terms and obligations of the
Employment Agreement executed
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between the Company and the Executive on July 13, 1989, containing a covenant
not to compete and provisions on nondisclosure of information, new
inventions, delivery of documents, and remedies. That Employment Agreement,
and any successor agreement to that Agreement, is hereby incorporated by
reference into this Agreement.
ARTICLE 7.
MISCELLANEOUS
7.1 Successors: Binding Agreement. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. The failure of the Company to
obtain such assumption agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled to hereunder if the Executive had
terminated the Executive's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
7.2 Successors and Assigns. This Agreement shall inure to the benefit
of, and be enforceable by, the personal heirs, distributees, devisees and
legatees of the Executive.
7.3 Notice. Notices and all communications provided for in this
Agreement shall be in writing and shall be deemed to have been received when
delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
at the end of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board of Directors with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice
of change of address shall be effective only upon receipt.
7.4 No Waiver. No provision of this Agreement may be modified, waived
or discharged unless in writing and signed by the Executive and such officer
of the Company as may be specifically designated or authorized by the Board
of Directors or by a Committee of the Board of Directors.
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No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
7.5 Entire Agreement. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement. This Agreement constitutes the entire agreement of the parties,
recites the sole considerations for the promises exchanged and supersedes any
prior agreements between the Executive and the Company or BBC with respect to
the subject matter hereof, including without limitation the Former Agreement
and the BBC Employment Agreement but excluding the Employment Agreement
incorporated by reference in Section 6.2 hereof.
7.6 Effective Time. This Employment Agreement shall become effective
upon consummation of the BBC Merger. If the BBC Merger is abandoned, this
Employment Agreement shall be null and void, and the Former Agreement shall
continue in effect in accordance with its terms.
7.7 Controlling Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware relating to contracts to be performed entirely therein. All amounts
payable to the Executive pursuant to this Agreement shall be paid subject to
such reporting and withholding requirements, if any, as may be imposed by
applicable law and applicable Company policy.
7.8 Invalid Provision. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
7.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
SURVIVAL TECHNOLOGY, INC.,
a Delaware corporation
By: /s/Xxxxx X. Xxxxxx
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Chairman, Compensation and
Stock Option Plan Committee
Address: 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
XXXXX X. XXXXXX
/s/Xxxxx X. Xxxxxx
-----------------------------------
Address: Survival Technology, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
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