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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, made effective as of the 1st day of
November, 1997, between Maxxim Medical, Inc., a Texas corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxx (the "Executive").
W I T N E S S E T H
The Executive is presently employed by the Company as Chairman of the
Board, President and Chief Executive Officer of the Company.
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the growth and success of the Company during the
past years has been substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements with the Company, which changes the Board has determined
will reinforce and encourage the Executive's continued attention and dedication
to the business of the Company as the leader of the Company's management team.
The Board recognizes that the foregoing are in the best interests of the Company
and its shareholders. The Executive is willing to commit himself to continue to
serve the Company, on the terms and conditions herein provided.
To effect the foregoing, the Company and the Executive desire to enter
into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT
The Company hereby agrees to continue to employ the Executive,
and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth therein.
2. TERM
The employment of the Executive by the Company as provided in
Section 1 will commence on the effective date hereof and end on October
31, 2000, unless further extended or sooner terminated as hereinafter
provided. On October 31, 2000 and on the last day of October of each
year thereafter, the term of the Executive's employment shall be
automatically extended one (1) additional year unless, at least six
months' prior to such last day of October, the Company shall have
delivered to the Executive or the Executive shall have delivered to the
Company written notice that the term of the Executive's employment
hereunder will not be extended.
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3. POSITION AND DUTIES
The Executive shall serve as Chairman of the Board of
Directors, Chief Executive Officer and President of the Company and
shall have such responsibilities and authority as may from time to time
be assigned to the Executive by the Board provided that his duties at
the date hereof shall not be subject to any significant diminution or
change without the Executive's consent. The Executive shall devote
substantially all his working time and efforts to the business and
affairs of the Company.
4. PLACE OF PERFORMANCE
In connection with the Executive's employment by the Company,
the Executive shall be based at such office or offices of the Company
as the needs of the Company's business dictate.
5. COMPENSATION AND RELATED MATTERS
(a) Compensation Committee. The Compensation Committee of the
Board of Directors shall be maintained and a majority of the members of
such committee who are not officers or employees of the Company shall
be empowered to take any action required to be taken by the
Compensation Committee hereunder (or if there only be one such outside
member of the Compensation Committee, such person shall be so
empowered).
(b) Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive a salary at a rate of
$350,000 per annum, in accordance with the current payroll policies of
the Company. This salary may be increased by the Board of Directors
upon the recommendation of the Compensation Committee from time to time
in accordance with normal business practices of the Company and, if so
increased, shall not thereafter during the term of this Agreement be
decreased. Compensation of the Executive by salary payments shall not
be deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of the Company.
The salary payments (including any increased salary payments) hereunder
shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the
Company to pay the Executive's salary hereunder.
(c) Bonus.The Board shall after the date hereof in
consultation with the Executive formulate and adopt a bonus plan for
the Executive which shall provide for the Board and the Executive to
jointly develop annual performance goals for the Company for each
fiscal year of the Company during the term of Executive's employment
hereunder (commencing with the fiscal year ended in calendar 1998). If
such performance goals are fully met, the Executive will be entitled to
receive, within 90 days of the end of each such fiscal year, an annual
bonus of not less than one-half of his annual salary provided for in
Paragraph 5(b).
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If such performance goals are not fully met for any fiscal year, the
Executive will be entitled to receive an annual bonus in an amount to
be determined by the Board, in its discretion.
(d) Loans to Executive. At such time or times as the Executive
shall request by letter to the Compensation Committee in the form of
Exhibit A (with all blanks appropriately completed), the Company shall
be obligated to make the Executive a loan or loans of up to an
aggregate of $400,000 (such amount to include all amounts previously
loaned under any prior employment agreement between the Company and the
Executive and each such loan being individually referred to as a "Loan"
and such loans being collectively referred to as the "Loans"), the
principal purpose of which shall be to enable the Executive to pay
federal income taxes associated with the exercise of stock options
exercisable by him. Each Loan shall be evidenced by a promissory note
executed by the Executive in the form of Exhibit B (with all blanks
appropriately completed). Each Loan shall be non-interest bearing,
unsecured and repayable in ten equal installments of principal, which
installments shall be payable on the third through the twelfth
anniversary of such Loan.
(e) Expenses. During the term of this Agreement, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in performing services hereunder,
including all expenses of travel and living expenses while away from
home on business or at the request of or in the service of the Company,
provided that such expenses are reasonable in amount and incurred and
accounted for in accordance with the policies and procedures presently
established by the Company and in accordance with applicable IRS
regulations.
(f) Other Benefits. The Company shall maintain in full force
and effect, and the Executive shall be entitled to continue to
participate in, all of its employee benefit plans and arrangements in
effect on the date hereof in which the Executive participates, or plans
or arrangements providing the Executive with at least equivalent
benefits thereunder, including, but not limited to, stock option plans
and 401(k) plans. The Company shall not make any changes in such plans
or arrangements which would adversely affect the Executive's rights or
benefits thereunder, unless such change occurs pursuant to a program
applicable to all employees of the Company entitled to participate
therein and does not result in a proportionately greater reduction in
the rights of or benefits to the Executive as compared with any other
executive of the Company, unless required by law. The Executive shall
be entitled to participate in or receive benefits under any employee
benefit plan or arrangement made available by the Company in the future
to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration
of such plans and arrangement presently in effect or made available in
the future. Any payments or benefits payable to the Executive hereunder
in respect of any calendar year during which the Executive is employed
by the Company for less than the entire year shall, unless otherwise
provided in the applicable plan or arrangement, be prorated in
accordance with the number of days in such calendar year during which
he is so employed.
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(i) Vacations. The Executive shall be entitled to the number
of vacation days in each calendar year, and to compensation in respect
of earned but unused vacation days, determined in accordance with the
Company's vacation plan. The Executive shall also be entitled to all
paid holidays given by the Company to its executives.
(j) Services Furnished. The Company shall furnish the
Executive with office space, stenographic assistance and such other
facilities and services as shall be suitable to the Executive's
position and adequate for the performance of his duties as set forth in
Section 3 hereof.
6. OFFICES
The Executive agrees to serve without additional compensation,
if elected or appointed thereto, as a director of the Company and any
of its subsidiaries and in one or more executive offices of any of the
Company's subsidiaries.
7. COMPETITION
The Employee agrees that during the term hereof he shall not,
directly or indirectly, for his own account or for the account of
others (i) engage, within any market area served by the Company, as
principal, agent, trustee or through the agency of any corporation,
partnership, association or agency, in any business which is a
Competitor, as hereinafter defined, or (ii) own more than five percent
(5%) of the outstanding capital stock, or be a partner or member of any
partnership which is a Competitor, or otherwise a direct or indirect
owner, or employee, of any Competitor. A business will be deemed to be
a "Competitor" if its business involves the development, manufacture,
distribution or marketing of any hospital or medical products of the
type developed, manufactured, distributed or marketed by the Company at
any time during the term of this Agreement. The Executive further
agrees that during the term hereof, he will not, either directly or
indirectly, through any person, firm, association or corporation with
which he is now or may hereafter become associated, cause or induce any
present or future employee of the Company to leave the employ of the
Company to accept employment with the Executive or with any Competitor.
The phrase "during the term hereof", as it is used in this Section
shall mean the effective date hereof until the earlier of (i) October
31, 2000, or (ii) the expiration of two (2) years from the date on
which this Agreement is terminated for any reason other than
termination by the Executive for Good Reason (as describe in Section
8(d)). The parties understand and agree that if the restrictions placed
upon the Executive relating to time, geographical area or scope of
activity are deemed more extensive than is necessary to protect the
good will or other business interest of the Company under the laws of
the State of Florida, then the parties hereby agree to amend the terms
hereof to such time, geographical areas and scope of activity and alter
the degree and extent of such provision by the minimal amount of
amendment or alteration necessary to bring such provisions within the
ambit of enforceability of such provisions in accordance with the laws
of the State of Florida.
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8. TERMINATION
The Executive's employment hereunder may be terminated without
any breach of this Agreement only under the following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. The Company may terminate the Executive's
employment hereunder if, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been absent
from his duties hereunder on a full-time basis for the entire period of
four consecutive months, and shall not have returned to the performance
of his duties hereunder within thirty (30) days after the Company gives
the Executive written Notice of Termination (which may occur before or
after the end of such four-month period).
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the
Company shall have "Cause" to terminate the Executive's employment
hereunder upon (A) the willful and continued failure by the Executive
to substantially perform his duties hereunder (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) or regular failure to follow the specific directives of
the Board, after demand for substantial performance that specifically
identifies the manner in which the Company believes the Executive has
not substantially performed his duties is delivered by the Company, or
(B) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise. For
purposes of this paragraph, 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 action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause without (i) reasonable notice to the
Executive setting forth the reasons for the Company's intention to
terminate for Cause, (ii) an opportunity for the Executive, together
with his counsel, to be heard before the Board, and (iii) delivery to
the Executive of a Notice of Termination as defined in subsection (e)
hereof, from the Board finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct set forth above in clause
(A) or (B) of the preceding sentence and specifying the particulars
thereof in detail.
(d) Terminating by the Executive. The Executive may terminate
his employment hereunder (i) for Good Reason or (ii) if his health
shall become impaired to an extent that makes his continued performance
of his duties hereunder hazardous to his physical or mental health or
his life, provided that the Executive shall have furnished the Company
with a written statement from a qualified doctor to such effect and,
provided further that, at the Company's request, the Executive shall
submit to an examination by a doctor selected by the Company and such
doctor shall have concurred in the conclusion contained in the written
statement furnished by the Executive.
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For purposes of this Agreement, "Good Reason" shall mean (A) a
Change in Control of the Company (as defined in the Termination
Agreement between the Company and the Executive dated as of January 31,
1997, hereafter the "Termination Agreement"), (B) a failure by the
Company to comply with any material provision of this Agreement which
has not been cured within ten (10) days, or other reasonable time if it
is not possible to cure the same in such ten days, after notice of such
noncompliance has been given by the Executive to the Company, or (C)
any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (e) hereof (and for purposes of this
Agreement, no such purported termination shall be effective).
(e) Any termination of the Executive's employment by the
Company or by the Executive (other than termination pursuant to
subsection (a) above) shall be communicated by Written Notice of
Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(f) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if
the Executive's employment is terminated pursuant to subsection (b)
above, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day period), (iii)
if the Executive's employment is terminated pursuant to subsection (c)
above, the date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given; provided that if within thirty
(30) days after any Notice of Termination is given the party receiving
such Notice of Termination notifies the other party that a dispute
exists concerning the termination and it is ultimately determined that
the Executive has prevailed in such dispute, the Date of Termination
shall be the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
9. COMPENSATION UPON TERMINATION OR DURING DISABILITY
(a) During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental
illness ("disability period"), the Executive shall continue to receive
his full salary and bonus at the rate then in effect for such period
until his employment is terminated pursuant to Section 8(b) hereof and
for a period of twenty-four months thereafter, provided that payments
so made to the Executive shall be reduced by the
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sum of the amounts of any payments by reason of disability insurance
procured by the Company for the benefit of the Executive.
(b) If the Executive's employment is terminated by his death,
the Company shall pay to the Executive's spouse, or if he leaves no
spouse, to his estate, commencing on the next succeeding day which is
the fifteenth day or last day of the month, as the case may be, and
semimonthly thereafter on the fifteenth and last days of each month,
the Executives full salary and bonus at the rate in effect at the time
of his death until a total of twenty-four months' salary and Minimum
Bonus have been paid.
(c) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive his full salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations
to the Executive under this Agreement.
(d) If (A) in breach of this Agreement, the Company shall
terminate the Executive's employment other than pursuant to Section
8(b) or 8(c) hereof (it being understood that a purported termination
pursuant to Section 8(b) or 8(c) hereof which is disputed and finally
determined not to have been proper shall be a termination by the
Company in breach of this Agreement) or (B) the Executive shall
terminate his employment for Good Reason, then
(i) the Company shall pay the Executive his full
salary and bonus through the Date of Termination at the rate
in effect at the time Notice of Termination is given;
(ii) in lieu of any further salary and bonus
payments to the Executive for periods subsequent to the Date
of Termination and, in addition to any amounts set forth in
(i), the Company shall pay as severance pay to the Executive
the Executive's annual salary and Minimum Bonus for such
subsequent periods, such payment to be made in lump sum on or
before the fifth day following the Date of Termination;
provided, however, that in the event that upon or by reason of
such termination for Good Cause the Executive is entitled to
the payments set forth in Section 6(a) of the Termination
Agreement, the Executive shall be paid such amounts under
Section 6(a) of the Termination Agreement and shall not be
entitled to any severance pay under this Subsection
9(f)(ii)(the intention of the parties being that under no
circumstances shall the Executive be entitled to payments
under both Section 6(a) of the Termination Agreement and this
Subsection 9(f)(ii)); and
(iii) if termination of the Executive's employment
arises out of a breach by the Company of this Agreement, the
Company shall pay all other damages to which the Executive may
be entitled as a result of such breach, including damages for
any and all loss of benefits to the Executive under the
Company's benefit plans which the Executive would have
received if the Company had not breached this Agreement and
had the Executive's employment continued for the full term
provided in Section 2
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hereof and including all reasonable legal fees and expenses
incurred by him as a result of such termination.
(e) If the Executive shall terminate his employment under
clause (ii) of Section 8(d) hereof, the Company shall pay the Executive
his full salary through the Date of Termination at the rate in effect
at the time of Notice of Termination is given.
(f) If the Executive's employment is terminated by the Company
without Cause and under circumstances not otherwise specifically
provided for under any of the other provisions of this Section
9(a)-(e), then the Company shall continue to pay to the Executive for a
period through the then scheduled termination of this Agreement and
shall pay the Executive an additional amount of twenty four months'
salary and Minimum Bonus.
(g) Unless the Executive is terminated under the provisions of
Subsections 8(a), (b) or (c) or the Executive terminates his employment
otherwise than under Subsection 8(d)(i) hereof, the Company shall
maintain in full force and effect, for the continued benefit of the
Executive for the greater of the number of years (including partial
years) remaining in the term of employment hereunder or two (2) years,
all employee benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of Termination
provided that the Executive's continued participation is possible under
the general terms and provisions of such plans and programs and is in
accordance with law. In the event that the Executive's participation in
any such plan or program is barred, the Company shall arrange to
provide the Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled to receive under
such plans and programs for which his continued participation is barred
if the provision of such benefits are in accordance with applicable
law.
11. SUCCESSORS; BINDING AGREEMENT
This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while
any amounts would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee,
to the Executive's estate.
12. NOTICE
For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
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If to the Executive: Xxxxxxx X. Xxxxxxxx
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to the Company: Maxxim Medical, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chairman of Compensation
Committee of the Board of
Directors
or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
13. MISCELLANEOUS
Effective November 1, 1997, this Agreement revokes and
rescinds all prior employment agreements with the Executive, including
the employment agreement dated effective as of November 1, 1994, as
amended. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such other officer as may be
specifically designated by the Board. 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. 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 set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida.
14. VALIDITY
The validity or unenforceability of any provision or
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.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY:
Maxxim Medical, Inc.
Attest: By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx, PhD.
By: /s/ Xxxx X. Xxxxxx Title: Member of Compensation
----------------------------- Committee of Board
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
XXXXXXX X. XXXXXXXX
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EXHIBIT A
[Letterhead of Xxxxxxx X. Xxxxxxxx]
[date]
Maxxim Medical, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn. Compensation Committee of
The Board of Directors
Re: Request for Loan
Dear Sirs:
The undersigned hereby requests pursuant to Section 5(c) of the
Employment Agreement dated effective as of November 1, 1997 by and between the
Company and the undersigned an immediate Loan (as defined therein) in the
aggregate amount of $400,000. The undersigned hereby certifies that at least two
thirds of the proceeds thereof are to be utilized to pay federal income taxes
associated with the exercise of Company stock options held by the undersigned
which the undersigned has exercised or intents to exercise, and that upon the
funding of such Loan, the aggregate Loans (as defined) granted by the Company to
the undersigned will not exceed $400,000.
VERY TRULY YOURS,
-------------------
XXXXXXX X. XXXXXXXX
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EXHIBIT B
PROMISSORY NOTE
$____________ __________,Florida [Date]
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates, and in the amounts so herein stipulated, the undersigned, promises to pay
to the order of MAXXIM MEDICAL, INC. at Clearwater, Florida________________
DOLLARS ($_________) in lawful money of the United States of America, which
shall be legal tender, in payment of all debts and dues, public and private,
at the time of payment.
The note is payable in ten equal annual installments of principal, the
first of which shall be payable commencing on the third anniversary of this
note, and the remainder of which shall be payable on each successive anniversary
thereafter. No interest shall accrue or be payable on the unpaid principal
amount of the note, except as specifically set forth below in the event of
default hereon.
-------------------------
XXXXXXX X. XXXXXXXX
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