EXHIBIT 10.68
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
March 16, 2002, by and between Xxxxxxx X. Xxxxxxxx, Xx., an individual resident
of the State of Georgia ("Employee"), and Horizon Medical Products, Inc., a
Georgia corporation (the "Employer").
W I T N E S S E T H:
WHEREAS, Employee and Employer desire to enter into a new Employment
Agreement that replaces and supersedes in its entirety the Employment Agreement
dated April 3, 1998 between Employee and Employer, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1. Employment.
Subject to the terms hereof, the Employer hereby employs Employee, and
Employee hereby accepts such employment. Employee will serve as President of
Employer. Employee agrees to devote his full business time and best efforts to
the performance of the duties that the Chief Executive Officer or the Board of
Directors of Employer (the "Board of Directors") may assign Employee from time
to time.
Section 2. Term of Employment.
The term of Employee's employment hereunder (the "Term") shall be from
March 16, 2002 (the "Effective Date") until the earlier of (i) September 16,
2002 or (ii) the occurrence of any of the following events:
(a) The death or total disability of Employee (total disability
meaning the failure to fully perform his normal required services hereunder for
a period of three (3) consecutive months during the Term hereof, as determined
by the Board of Directors, by reason of mental or physical disability);
(b) The termination by Employer of Employee's employment hereunder,
upon prior written notice to Employee, for "good cause", as determined by the
Board of Directors. For purposes of this Agreement, "good cause" for termination
of Employee's employment shall exist (i) if Employee is convicted of, pleads
guilty to, or confesses to any felony or any act of fraud, misappropriation, or
embezzlement, (ii) if Employee has engaged in a dishonest act to the material
damage or prejudice of Employer or a subsidiary of Employer, or in conduct or
activities materially damaging to the business of Employer or a subsidiary of
Employer, (iii) if Employee fails to comply with the terms of this Agreement,
and, within thirty (30) days after written notice from Employer of such failure,
Employee has not corrected such
failure or, having once received such notice of failure and having so corrected
such failure, Employee at any time thereafter again so fails, or (iv) if
Employee fails to follow a lawful directive of the Board of Directors (which is
consistent with Employee's position as President) and, within thirty (30) days
after written notice from Employer of such failure, Employee has not corrected
such failure; or
(c) The termination of this Agreement by either party upon at least
ninety (90) days prior written notice.
Section 3. Compensation.
3.1 Term of Employment. Employer will provide Employee with the
following salary, expense reimbursement, and additional employee benefits during
the term of employment hereunder:
(a) Salary. Employee will be paid a salary (the "Salary") of no less
than Two Hundred and Twenty-Five Thousand Dollars ($225,000) per annum, less
deductions and withholdings required by applicable law. The Salary shall be paid
to Employee in equal monthly installments (or on such more frequent basis as
other executives of Employer are compensated).
(b) Bonus. Employee will be entitled to an annual bonus (the
"Bonus") equal to 50% of his Salary for the entire 2002 fiscal year, based upon
the achievement during the 2002 fiscal year of Employer measured at the end of
such year of a 25% or more (but less than 35%) increase in the earnings per
share of the Common Stock from the earnings per share of the Common Stock for
the 2001 fiscal year. If such increase in earnings per share is 35% or more,
then the Bonus for such year shall equal 100% of Employee's Salary for the
entire 2002 fiscal year. Any Bonus earned shall be paid promptly upon the
availability of annual financial results for 2002 (which is expected to occur in
February 2003). In the calculation of such Bonus under this Section 3.1(b), all
restructuring costs and charges incurred by Employer in connection with the
refinancing in March 2002 will be disregarded.
(c) Car Allowance. Employer shall provide Employee with a leased
automobile during the Term of this Agreement, the monthly lease payments for
which shall not exceed $1,500.00, and shall pay for gasoline, insurance, and
maintenance expenses for such automobile.
(d) Club Dues. Employer shall make an annual contribution in
Employee's name, of Five Thousand Dollars --------- ($5,000.00) to the Florida
State University Club for membership in the Golden Chief Club.
(e) Vacation. Employee shall receive six (6) weeks vacation time per
calendar year during the term of this Agreement. Any unused vacation days in any
calendar year may not be carried over to subsequent years.
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(f) Expenses. Employer shall reimburse Employee for all reasonable
and necessary expenses incurred by Employee in furtherance of the Company's
business at the request of and on behalf of Employer.
(g) Benefit Plan. Employee may participate in such medical, dental,
disability, hospitalization, life insurance, and other benefit plans (such as
pension and profit sharing plans) as Employer maintains from time to time for
the benefit of other executives of Employer, on the terms and subject to the
conditions set forth in such plans. Without limiting the foregoing, Employer
shall pay the premiums on the disability policies maintained on Employee's
behalf and set forth on Exhibit "A" hereto. Employer shall also reimburse
Employee with respect to any reasonable medical and dental expenses incurred by
Employee and/or his immediate family members which are not reimbursable under
the medical and dental benefit plans maintained by Employer in which Employee
participates.
3.2 Effect of Termination or Change of Control.
(a) Except as hereinafter provided, upon the termination of the
employment of Employee hereunder for any reason, Employee shall be entitled to
all compensation and benefits earned or accrued under Section 3.1 as of the
effective date of termination (the "Termination Date"), but from and after the
Termination Date no additional compensation or benefits shall be earned by
Employee hereunder. Except in the case of a termination of the employment of
Employee pursuant to Section 2(b) hereof or a termination by Employee of
Employee's employment pursuant to Section 2(c) hereof, Employee shall be deemed
to have earned any Bonus payable with respect to the calendar year in which the
Termination Date occurs on a prorated basis (with the Bonus calculated as of the
end of the month in which termination occurs). Any such Bonus shall be payable
on (i) the date on which the Bonus would have been paid had Employee continued
his employment hereunder if the Termination Date occurs during December or (ii)
the 30th day following the end of the month in which the Termination Date occurs
and shall be calculated as of the end of the month in which the Terminate Date
occurs. If Employee's employment hereunder is terminated by Employer pursuant to
Section 2(c) hereof or if Employee leaves the employment of Employer on
September 16, 2002 (in which event the Termination Date will be September 16,
2002, then, in addition to any other amount payable hereunder, Employer shall
continue to pay Employee his normal Salary pursuant to Section 3.1(a) for twelve
(12) months after the Termination Date, plus an amount equal to Employee's Bonus
for the calendar year 2002, in periodic payments on the dates each month on
which Employer's employees are paid. Employee shall continue to be eligible to
receive the benefits set forth in Section 3.1(c) and Section 3.1(g) above during
such twelve (12) months.
(b) Upon the occurrence of a Change in Control Event (as defined
below) and if at the time of the Change in Control Event Employee is employed
with Employer or is receiving severance payments under Section 3.2(a) above,
then Employer will pay to Employee (in lieu of an obligation to make further
payments to Employee under or on account of Section 3.1(a)) the annual Salary
that would have been payable to Employee under this Agreement for
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each of the three (3) years after the Change in Control Event. The amounts
payable to Employee under the previous sentence of this Section 3.2(b) shall be
paid by Employer in equal monthly payments during such period or in a lump sum,
at the option of Employee.
If any payment or other benefit (a "Termination Payment")
received or to be received by Employee in connection with a Change in Control
Event (whether or not this Agreement is terminated) or Employee's termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement, or agreement with Employer, with any person whose actions result in
a Change in Control Event or with any person affiliated with Employer or such
person) is or will be subject to the tax (the "Excise Tax") imposed by ss.4999
of the Internal Revenue Code of 1986, as amended (the "Code"), Employer shall
pay to Employee a Gross-Up Payment (as defined below) to the extent provided by
the third paragraph of this Section 3.2(b). A Gross-Up Payment shall be payable
pursuant to this Section 3.2(b) on and subject to the following terms and
conditions:
(1) At the time the applicable Termination Payment is made, an
additional amount (the "Gross-Up Payment") shall be paid by Employer
such that the net amount retained by Employee, after deduction of any
Excise Tax on such Termination Payment and any federal, state, and
local income tax, employment tax, and Excise Tax on the Gross-Up
Payment, shall be equal to the amount or value of such Termination
Payment. For purposes of determining whether any such Termination
Payment will be subject to the Excise Tax, all Termination Payments
shall be treated as "parachute payments" within the meaning of
ss.280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of ss.280G(b)(1) of the Code shall be treated as being
subject to the Excise Tax, unless in the opinion of tax counsel
reasonably acceptable to Employee and selected by the accounting firm
which, immediately prior to the Change in Control Event, was Employer's
independent auditors, such payments (in whole or in part) do not
constitute "parachute payments" within the meaning of ss.280G of the
Code or represent reasonable compensation for services actually
rendered in excess of the "base amount" allocable to such reasonable
compensation. The full amount of the Gross-Up Payment shall be treated
as being subject to the Excise Tax. The value of any non-cash benefits
or any deferred payment or benefit shall be determined in accordance
with the principles of ss.ss.280G(d)(3) and (4) of the Code.
(2) For purposes of determining the amount of any Gross-Up
Payment, Employee shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year
in which the applicable Termination Payment or Gross-Up Payment is
made, and shall be deemed to pay state and local income taxes at the
highest marginal rates of taxation in the state and locality of his
residence on the date the applicable Termination Payment or Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
that could be obtained from deduction of such state and local taxes.
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(3) If the Excise Tax or income tax payable with respect to a
Gross-Up Payment as finally determined exceeds the amount taken into
account or paid to Employee at the time the applicable Termination
Payment or Gross-Up Payment is made (including by reason of any payment
the existence or amount of which cannot be determined at the time of
the applicable Gross-Up Payment), Employer shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable
by Employee with respect to such excess) at the time that the amount of
such excess if finally determined.
For purposes of this Agreement a "Change in Control Event" shall
mean the occurrence of either one of the following transactions on or prior to
March 16, 2005:
(1) the adoption of a plan of merger or consolidation of
Employer with any other corporation as a result of which the holders of
the outstanding voting stock of Employer as a group would receive less
than 50% of the voting stock of the surviving or resulting corporation;
or
(2) the sale of substantially all of the assets of Employer,
and
(3) as a result of the transaction described in clause (1) or
(2) above, the shareholders of Employer receive cash and/or securities
valued on the date of the consummation of the transaction at $3.00 or
more per share.
Section 4. Other Payments and Reimbursements.
In consideration for Employee's entering into this Agreement, Employer
shall:
(a) reimburse Employee at the closing of the Transaction for all
funds advanced personally by Employee on behalf of Employer during Employee's
efforts in 2002 to refinance its senior secured indebtedness;
(b) pay to Employee within one week after the closing of the
Transaction bonus compensation in the amount of $314,738.39, with which payment
Employee shall immediately repay to Employer all principal and accrued interest
under outstanding promissory notes payable by Employee to Employer;
(c) grant options to purchase the common shares of Employer pursuant
to the provisions of that certain Option Agreement dated March 16, 2002; and
(d) pay to Employee at the Closing a cash bonus of Two Hundred
Twenty-Five Thousand Dollars ($225,000.00).
Except as otherwise provided above in this Section 4, Employee hereby
forever waives and relinquishes any right or interest that Employee may have or
claim to have with respect to all Salary compensation, bonus compensation, or
any other compensation or benefits accruing
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prior to the date hereof under Employee's prior Employment Agreement dated April
3, 1998, as amended, between Employer and Employee.
For purposes of this Section 4:
(1) the term "Transaction" shall mean the refinancing of the
senior secured indebtedness of Employer in a financing described under
that certain Note Purchase Agreement dated March 1, 2002; and
(2) the term "Forbearance Agreement" shall mean that certain
Forbearance Agreement dated March 30, 2001 between Employer and Bank of
America, N.A., as amended.
Section 5. Miscellaneous.
5.1 Severability. The covenants in this Agreement shall be construed as
covenants independent of one another and as obligations distinct from any other
contract between Employee and Employer. Any claim that Employee may have against
Employer shall not constitute a defense to enforcement by Employer of this
Agreement.
5.2 Notices. Any notice or other document to be given hereunder by any
party hereto to any other party hereto shall be in writing and delivered in
person or by courier, by telecopy transmission, or sent by any express mail
service, postage or fees prepaid to the following addresses:
Employer: Attention: President
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Employee: Xx. Xxxxxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
5.3 Binding Effect. This Agreement inures to the benefit of, and is
binding upon, Employer and its respective successors and assigns, and Employee,
together with Employee's executor, administrator, personal representatives,
heirs, and legatees.
5.4 Entire Agreement. This Agreement is intended by the parties hereto
to be the final expression of their agreement with respect to the subject matter
hereof and is the complete and exclusive statement of the terms thereof,
notwithstanding any representations, statements, or
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agreements to the contrary heretofore made. This Agreement supersedes and
terminates all prior employment and compensation agreements, arrangements, and
understandings between or among Employer and Employee. This Agreement may be
modified only by a written instrument signed by all of the parties hereto.
5.5 Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed, and governed by and in accordance
with, the laws of the State of Georgia without reference to its conflicts of law
principles. No provision of this Agreement shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority or by any board of arbitrators by reason of
such party or its counsel having or being deemed to have structured or drafted
such provision.
5.6 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.7 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
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ L. Xxxxx Xxxxx
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EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxxx, Xx.
