1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of July 9, 1999, by and between
Sabratek Corporation, a Delaware corporation ("Sabratek"), GDS Technology, Inc.,
an Indiana corporation ("GDS") and Xxxx X. Xxxxxx ("Executive").
WHEREAS, pursuant to the exercise of a Call Option issued
under that certain Stock Option Agreement by and among Sabratek, GDS (as a
subsidiary of Sabratek, the "Company") and certain of the stockholders of GDS,
Sabratek has acquired at least 94.1% of the issued and outstanding shares of
capital stock of the Company (the "Acquisition") and will operate the businesses
currently operated by GDS (the "Business") through the Company or as a division
of Sabratek.
WHEREAS, Sabratek, the Company and Executive desire to set
forth in this Agreement the terms and conditions relating to the continued
employment of Executive with the Company.
If the separate existence of the Company ceases as a result of
the merger or other combination of the Company into Sabratek, then references to
the Company as the employer of Executive shall be deemed to mean Sabratek and
references to the Board of Directors and CEO of the Company shall be deemed to
mean as appropriate the Board of Directors and CEO of Sabratek.
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.
1. Employment. The Company shall employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as a
senior executive of the Company with respect to the Business and shall have the
normal duties, responsibilities and authority of an executive officer in such
position, subject to the power of the Company's board of directors (the "Company
Board") or the Company's Chief Executive Officer or other senior executive
designated by the Company's Chief Executive Officer (the "Company CEO") to
expand or limit such duties, responsibilities and authority and to override
actions of the Executive.
(b) Executive shall report directly to the Company CEO and
shall devote his best efforts and his full business time and attention (except
for permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company. Executive shall perform
his duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
2
3. Base Salary and Benefits.
(a) During the Employment Period, the base salary of the
Executive shall be designated by the Company Board or Company CEO, but will not
be less than $150,000 per annum (the "Base Salary"), which salary shall be
payable in regular installments in accordance with the Company's general payroll
practices and shall be subject to customary withholding. The Executive's base
salary level shall be reviewed annually by the Company Board or Company CEO. In
addition, during the Employment Period, Executive shall be eligible to
participate in all of Sabratek's employee benefit programs.
(b) The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(c) In addition to the Base Salary, the Company Board or
Company CEO may, in its sole discretion, award a cash bonus to Executive
following the end of each fiscal year during the Employment Period based upon
Executive's performance and the Company's operating results during such year.
The Executive shall also be eligible to receive stock grants and options with
respect to the capital stock of Sabratek under Sabratek's Amended and Restated
Stock Option Plan during the Employment Period at the sole discretion of the
board of directors of Sabratek (the "Sabratek Board") or if authorized by the
Sabratek Board, at the sole discretion of the Company CEO.
4. Term.
(a) Unless renewed by the mutual agreement of the Company and
Executive, the Employment Period shall end on the third anniversary of the date
of this Agreement, provided that (i) the Employment Period shall terminate prior
to such date upon Executive's resignation, death or permanent disability or
incapacity (as determined by the Company Board or the Company CEO in its good
faith judgment); (ii) the Employment Period may be terminated by the Company at
any time prior to such date for Cause (as defined below) or without Cause by
delivery of notice to Executive of such termination; and (iii) the Employment
Period may be terminated by Executive upon material breach of this Agreement by
the Company and the failure to cure such breach within 30 days after written
notice thereof from Executive.
(b) If the Employment Period is terminated by the Company
without Cause prior to the third anniversary of the date of this Agreement,
Executive shall be entitled to receive his Base Salary and all fringe benefits
through such third anniversary, provided that Executive shall be entitled to
such continuation of his Base Salary and benefits if and only if Executive has
not breached the provisions of paragraphs 5 through 9 hereof.
-2-
3
(c) If the Employment Period is terminated by the Company for
Cause or is terminated pursuant to paragraph 4(a)(i) above, Executive shall be
entitled to receive his Base Salary through the date of termination plus any
bonus which has be fully earned but remains unpaid prior to such time.
(d) Except as otherwise expressly provided herein, all of
Executive's rights to fringe benefits and bonuses hereunder (if any) which
accrue after the termination of the Employment Period shall cease upon such
termination; provided that upon termination of the Employment Period for any
reason other than the death of Executive, the Company shall transfer and assign
to Executive, without cost, any and all life insurance policies then owned by
the Company covering Executive's life. The Company may offset any amounts
Executive owes it or its subsidiaries against any amounts it owes Executive
hereunder.
(e) For purposes of this Agreement, "Cause" shall mean (i) a
material breach of this Agreement by Executive and the failure to cure such
breach within 30 days after written notice thereof from the Company, (ii) a
breach of Executive's duty of loyalty to Sabratek or any of its subsidiaries
(including the Company) or any act of dishonesty or fraud with respect to
Sabratek or any of its subsidiaries (including the Company), (iii) the
commission by Executive of a felony, a crime involving moral turpitude or other
act or omission causing material harm to the standing and reputation of Sabratek
and its subsidiaries (including the Company), or (iv) Executive's continued
failure to perform his duties as reasonably directed by the Company Board or the
Company CEO.
5. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
(including those obtained while employed by GDS prior to the date of this
Agreement) concerning the business or affairs of Sabratek or any subsidiary of
Sabratek (including the Company) ("Confidential Information") are the property
of Sabratek or such subsidiary as applicable. Therefore, Executive agrees that
he shall not disclose to any unauthorized person or use for his own purposes any
Confidential Information without the prior written consent of the Company Board
or the Sabratek Board as applicable, unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive's acts or omissions. Executive shall
deliver to the Company or Sabratek as applicable at the termination of the
Employment Period, or at any other time the Company or Sabratek may request, all
memoranda, notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product (as defined below) or the business of
Sabratek or any subsidiary of Sabratek (including the Company) which he may then
possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to Sabratek's or any of its
-3-
4
subsidiaries' (including the Company's) actual or anticipated business, research
and development or existing or future products or services and which are
conceived, developed or made by Executive while employed by the Company ("Work
Product") belong to Sabratek or such subsidiary. Executive shall promptly
disclose such Work Product to the Company Board and perform all actions
reasonably requested by the Company Board (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
7. Non-Compete. In further consideration of the compensation
to be paid to Executive hereunder, Executive acknowledges that in the course of
his employment with the Company he shall become familiar, and during his
employment with GDS he has become familiar, with the trade secrets of the
Company and with other Confidential Information concerning the Company and any
predecessors (as well as with Confidential Information of Sabratek and its
subsidiaries) and that his services have been and shall be of special, unique
and extraordinary value to Sabratek and its subsidiaries (including the
Company). Therefore, Executive agrees that, during the Employment Period and
until the third anniversary of the date of this Agreement (the "Non-Compete
Period"), he shall not directly or indirectly own any interest in, manage,
control, participate in, consult with, render services for, or in any manner
engage in any business competing with the businesses of Sabratek or its
subsidiaries (including the Company) or perform research for, design, develop,
manufacture or produce any products which are competitive with any products or
the businesses of Sabratek or any of its subsidiaries (including the Company),
as the products or businesses of Sabratek and its subsidiaries exist or are in
process on the date of the termination of Executive's employment, within any
geographical area in which Sabratek or its subsidiaries (including the Company)
engage or plan to engage in such businesses. Notwithstanding the foregoing, the
Non-Compete Period and the restrictions set forth in the preceding sentence
shall be extended until the first anniversary of the expiration of the
Employment Period (if such date is later than the third anniversary of the date
of this Agreement), in the event that either (i) the Employment Period is
terminated by the resignation of Executive, (ii) prior to the expiration of the
Employment Period, the Company offers to extend the term of this Agreement upon
terms no less favorable to Executive than those contained herein and Executive
declines to accept such offer or (iii) the Company elects to obtain such
extension and notifies Executive of such election at the time the Employment
Period is terminated and the Company agrees to continue to pay to Executive his
Base Salary and fringe benefits through such first anniversary date (which
agreement of the Company shall be acknowledged in the notification to Executive
of such election). Nothing herein shall prohibit Executive from being a passive
owner of not more than 2% of the outstanding stock of any class of a corporation
which is publicly traded, so long as Executive has no active participation in
the business of such corporation.
8. Non-Solicitation. During the Employment Period and until
the third anniversary of the date of this Agreement, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of Sabratek or any of its subsidiaries (including the Company) to
leave the employ of Sabratek or such subsidiary, or in any way
-4-
5
interfere with the relationship between Sabratek or any such subsidiary and any
employee thereof or (ii) induce or attempt to induce any customer, supplier,
licensee, licensor, franchisee or other business relation of Sabratek or any
such subsidiary to cease doing business with Sabratek or such subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and Sabratek or any such subsidiary (including,
without limitation, making any negative statements or communications about
Sabratek or its subsidiaries). Notwithstanding the foregoing, the
Non-Solicitation Period and the restrictions set forth in the preceding sentence
shall be extended until the first anniversary of the expiration of the
Employment Period (if such date is later than the third anniversary of the date
of this Agreement), in the event that either (i) the Employment Period is
terminated by the resignation of Executive, (ii) prior to the expiration of the
Employment Period, the Company offers to extend the term of this Agreement upon
terms no less favorable to Executive than those contained herein and Executive
declines to accept such offer or (iii) the Company elects to obtain such
extension and notifies Executive of such election at the time the Employment
Period is terminated and the Company agrees to continue to pay to Executive his
Base Salary and fringe benefits through such first anniversary date (which
agreement of the Company shall be acknowledged in the notification to Executive
of such election), reduced by any Base Salary and fringe benefits paid by the
Company during such period pursuant to paragraph 7 of this Agreement.
9. Enforcement. If, at the time of enforcement of paragraph 5,
6, 7, or 8 of this Agreement, a court holds that the restrictions stated herein
are unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reason able under such
circumstances shall be substituted for the stated period, scope or area. Because
Executive's services are unique and because Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
not be an adequate remedy for any breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, the Company, Sabratek or
their successors or assigns may, in addition to other rights and remedies
existing in their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by
Executive of paragraph 7 and/or 8, the Non-Compete Period and/or
Non-Solicitation Period, as applicable, shall be tolled until such breach or
violation has been duly cured. Executive agrees that the restrictions contained
in paragraphs 7 and 8 are reasonable.
10. Executive's Representations. Executive hereby represents
and warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
-5-
6
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company and Sabratek, this
Agreement shall be the valid and binding obligation of Executive, enforceable in
accordance with its terms. Executive hereby acknowledges and represents that he
has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms and
conditions contained herein.
11. Survival. Paragraphs 5 through 9 and paragraphs 11
through 19 shall survive and continue in full force in accordance with their
terms notwithstanding any termination of the Employment Period.
12. Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below indicated:
Notices to Executive: Xxxx X. Xxxxxx
00000 Xxxx Xxxxx
Xxxxxxx, XX 00000
with a copy to: Xxxxxx & Xxxxxxxxx
600 1st Source Bank Center
000 Xxxxx Xxxxxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Xx.
Notices to Sabratek: Sabratek Corporation
0000 Xxxxx Xx. Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice in accordance with this
paragraph to the sending party. Any notice under this Agreement shall be deemed
to have been given when so delivered or mailed.
13. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any
-6-
7
other provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
15. No Strict Construction. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the Company and
Sabratek and their respective heirs, successors and assigns, except that
Executive may not assign his rights or delegate his obligations hereunder
without the prior written consent of Sabratek and the Company.
18. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE
EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF ILLINOIS OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
19. Amendment and Waiver. The provisions of this Agreement may
be amended or waived only with the prior written consent of Sabratek, the
Company and Executive, and no course of conduct or failure or delay in enforcing
the provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
-7-
8
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
SABRATEK CORPORATION
By /s/ Xxxxxxx Xxxxxx
--------------------------
Its President
--------------------------
GDS TECHNOLOGY, INC.
By /s/ Xxxxxxxx X. Xxxxx
--------------------------
Its President
--------------------------
/s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
-8-
