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EXHIBIT 10.32
SABRATEK CORPORATION
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of February 25, 1997, between Sabratek
Corporation, a Delaware corporation, ("Sabratek"), and Xxxxxxx X. Xxxxxxx
("Executive").
Pursuant to an Asset Purchase Agreement (the "Purchase Agreement")
among Sabratek, Executive and Xxxxx, Inc., a Massachusetts corporation
("Xxxxx"), Sabratek will acquire the assets of Xxxxx and will operate the
business currently operated by Xxxxx (the "Business") from and after the closing
under the Purchase Agreement through a new subsidiary of Sabratek or as a
division of Sabratek (either, the "Company").
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 5 hereof (the "Employment Period").
2. Position and Duties:
(a) During the Employment Period, Executive shall serve as the
President of the Business and shall have the normal duties, responsibilities and
authority of the President of the Business, subject to the power of the
Company's board of directors (the "Board") or the Company's Chief Executive
Officer (the "CEO") to expand or limit such duties, responsibilities and
authority and to override actions of the Executive. The responsibilities and
authority of Executive shall be sufficient to enable Executive to accomplish the
goals of the Company set forth in paragraph 5(e).
(b) Executive shall report directly to the CEO, shall also have a
reporting relationship to the Company's President 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.
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3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be
$150,000 per annum or such higher rate as the CEO may designate from time to
time (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 CEO, and Executive shall be eligible for performance based
increases on the same basis as other senior executives of Sabratek. In addition,
during the Employment Period, Executive shall be eligible to participate in all
of the Company'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 CEO (with ratification of
the Board or a committee thereof) may award a cash or stock bonus or options to
purchase Sabratek common stock 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.
4. Stock Options.
(a) As of the date of this Agreement, Executive is hereby granted
options to acquire 100,000 shares of Sabratek's common stock (the "Base
Options") pursuant to Sabratek's Amended and Restated 1993 Stock Option Plan
(the "Option Plan"). The Base Options shall have a 10-year term and shall have
an exercise price per share equal to the closing sales price for the Sabratek
common stock on the trading day prior to the date of grant. Subject to the
provisions of this paragraph 4, the Base Options shall vest and become
exercisable by Executive as follows: (i) Base Options to Purchase 40,000 shares
shall be fully vested and exercisable at the date hereof; (ii) Base Options to
purchase 30,000 shares shall vest and become exercisable on the first
anniversary of the date hereof; (iii) Base Options to purchase 20,000 shares
shall vest and become exercisable on the second anniversary of the date hereof;
and (iv) Base Options to purchase 10,000 shares shall vest and become
exercisable on the third anniversary of the date hereof.
(b) In addition, as of the date of this Agreement, Executive is also
hereby granted additional options to acquire 100,000 shares of Sabratek's common
stock (the "Additional Options") pursuant to the Option Plan. The Additional
Options shall have a 10-year term and shall have an exercise price per share
equal to the closing sales price for the Sabratek common stock on the trading
day prior to the date of grant. Subject to the provisions of this paragraph 4,
the Additional Options shall vest and become exercisable by Executive as
follows: (i) Additional Options to purchase 50,000 shares shall vest and become
exercisable on the first anniversary of the date hereof; (ii) Additional Options
to purchase 25,000 shares shall vest and become exercisable on the second
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anniversary of the date hereof; and (iii) Additional Options to purchase 25,000
shares shall vest and become exercisable on the third anniversary of the date
hereof.
(c) If the Employment Period is terminated by the Company for Cause
(as defined below) or is terminated because of the death or permanent disability
or incapacity (which shall mean the inability on a permanent basis to carry out
the duties and responsibilities of the position on an effective basis due to
casualty, illness, injury, or other impairment of mental, physical or emotional
faculties, as determined by the CEO exercising reasonable judgment) of
Executive, (i) all unvested Base Options will immediately vest and become
exercisable and (ii) all unvested Additional Options will immediately be
forfeited to the Company and Executive will have no further rights in respect
thereof.
(d) If the Employment Period is terminated by the Company without
Cause or in the event of a Sabratek Change of Control (as defined below), all
unvested Base Options and all unvested Additional Options will immediately vest
and become exercisable.
(e) If the Employment Period is terminated by the resignation of
Executive, all unvested Base Options and all unvested Additional Options will
immediately be forfeited to the Company and Executive will have no further
rights in respect thereof.
(f) Following termination of the Employment Period for any reason,
all vested Base Options and vested Additional Options shall be exercisable by
Executive (or his executor, administrator or other legal representative) for a
period of 60 days from the date of termination.
(g) At the time of the grant of the Base Options and Additional
Options, Executive shall be issued an option grant letter in the form
customarily used by the Company for option grants made under the Option Plan,
and the Base Options and the Additional Options shall be subject to the terms
and conditions of the Option Plan in addition to the terms set forth in this
Agreement.
(h) If Executive is still employed with the Company on March 31,
2000, at the election of Executive and upon the written request of Executive
made within ten days following such date (or if the Employment Period is
terminated by the Company without Cause prior thereto, within ten days
following such termination), the Company shall repurchase from Executive all
vested and unexercised Base Options held by Executive for a purchase price equal
to $18.00 per Base Option. Such purchase price (net of any required tax
withholding) shall be payable by the delivery of a cashiers or certified check
payable to Executive or wire transfer of immediately available funds to an
account designated by Executive. From and after such payment, Executive shall
have no further rights with respect to such Base Options.
(i) For purposes of this paragraph 4, a "Sabratek Change of Control"
shall be deemed to occur upon (i) the sale of all or substantially all of the
assets of Sabratek, (ii) a merger or consolidation of Sabratek with another
corporation, or an exchange of the securities of Sabratek for the securities of
another corporation, with the result that the shareholders of Sabratek
immediately before such merger, consolidation or exchange own less than a
majority of the
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outstanding voting securities of the surviving corporation of such merger or
consolidation, or of the corporation in which such shareholders own securities
as a result of and following such exchange, immediately after such merger,
consolidation or exchange, (iii) the acquisition by any person or group (within
the meaning of Section 13(d) under the Securities Exchange Act of 1934, as
amended) of a majority of the outstanding common stock of Sabratek in one or a
series of related transactions, or (iv) the failure of K. Xxxx Xxxxx to serve
as either an executive officer or director of Sabratek. Notwithstanding the
foregoing, a change of control shall not be deemed to occur as a result of any
of the foregoing transactions if the corporate existence of Sabratek is not
affected by such transaction and Sabratek's chief executive officer and
directors retain their positions with Sabratek (and constitute at least a
majority of the board of directors) following the transaction.
5. 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 (which shall mean the inability on a permanent basis to carry out
the duties and responsibilities of the position on an effective basis due to
casualty, illness, injury, or other impairment of mental, physical or emotional
faculties, as determined by the CEO exercising reasonable judgment) and (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.
(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 through such third anniversary,
provided that Executive shall be entitled to such continuation of his Base
Salary if and only if Executive has not breached in any material respect the
provisions of paragraphs 6 through 10 hereof. The amounts payable pursuant to
this paragraph 5(b) shall be reduced by the amount of any compensation
Executive receives with respect to any other employment during the period prior
to the third anniversary hereof.
(c) If the Employment Period is terminated by the Company for Cause
or is terminated pursuant to paragraph 5(a)(i) above, Executive shall be
entitled to receive his Base Salary through the date of termination.
(d) 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.
(e) For purposes of this Agreement, "Cause" shall mean (i) a
material breach of this Agreement by Executive, (ii) a material breach of
Executive's duty of loyalty to Sabratek or any of its subsidiaries or any act
of dishonesty or fraud with respect to Sabratek or any of its subsidiaries,
(iii) the commission of 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, (iv) Executive's continued failure
to perform his duties as directed by the Board or the CEO as contemplated by
this Agreement or (v) Executive's substandard performance. For the purposes of
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this Agreement, "substandard performance" shall mean the failure of Executive
to use reasonable efforts (i) to cause (A) the present facility of the Business
to reach full production capacity on or before September 1, 1997 and (B) the
construction of eight additional new facilities (or such lesser number mutually
agreed to by Executive and the Company) for the Business and the reaching of
full production capacity by such facilities on or before the third anniversary
of the date of this Agreement, or (ii) to cause the Business to be operated so
as to maximize the flush business capacity and control costs without impact
upon product quality or safety, in each case as determined by the CEO as
provided herein. For purposes of the preceding sentence, "full production
capacity" shall mean the capability of producing at an average weekly
production level of at least 400,000 flush product units. The CEO shall give
Executive written notice of the CEO's concern over Executive's performance, and
Executive shall have 15 days to prepare for a meeting with the CEO, at which
time Executive may present any information on market competitive conditions and
any other factors bearing upon his performance. In assessing Executive's
performance, the CEO shall give due consideration to the overall industry
experience, competitive factors and other factors identified by Executive
bearing on his performance in assessing Executive's performance. After due
consideration of these factors, if the CEO determines in good faith that
Executive has failed to meet the foregoing standards regarding substandard
performance, the CEO may provide Executive a notice of termination for cause,
which notice shall be effective 45 days after delivery to Executive, during
which period Executive shall have the opportunity to cure such substandard
performance. Prior to the expiration of such 45 day period, Executive shall
have the right to meet with CEO and present any information regarding the cure
of such substandard performance, and unless the CEO determines as a result of
such meeting that the substandard performance no loner exists, the notice of
termination for cause shall become effective at the end of such 45 day period.
The parties agree that the Executive's obligation is to use reasonable efforts
to accomplish the production goals identified above and that the achievement of
sales of flush products in a sufficient amount to utilize such production is
not a component to be analyzed in measuring Executive's performance for this
purpose.
(f) The Company may offset any amounts Executive owes it or its
subsidiaries against any amounts it owes Executive hereunder, provided that the
Company shall have no such right of offset in respect of any amounts owed to
it (or alleged to be owed to it) as a result of the breach (or alleged breach)
by Executive of any representation or warranty made by Executive in the
Purchase Agreement.
6. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by Sabratek
and its subsidiaries (including those obtained while employed by Xxxxx prior to
the date of this Agreement and the acquisition of Xxxxx'x assets by the
Company) concerning the business or affairs of Sabratek (including the Business)
or any subsidiary of Sabratek ("Confidential Information") are the property of
Sabratek or such subsidiary. 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 CEO, 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 Sabratek at the termination of the
Employment Period, or at any other time Sabratek may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software
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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 which he may then possess or have under his control.
7. 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 subsidiaries' 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 Sabratek and its subsidiaries, or by Xxxxx ("Work Product") belong to
Sabratek or such subsidiary. Executive shall promptly disclose such Work Product
to the CEO and perform all actions reasonably requested by the CEO (whether
during or after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
8. 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 Sabratek or any of its subsidiaries he shall become
familiar, and during his employment with Xxxxx he has become familiar, with the
trade secrets of the Business and with other Confidential Information concerning
Sabratek and its predecessors and its subsidiaries and that his services have
been and shall be of special, unique and extraordinary value to Xxxxx and to
Sabratek and its subsidiaries. Therefore, Executive agrees that, during the
Employment Period and until the later of (i) the third anniversary of the date
of this Agreement and (ii) the first anniversary of the expiration of the
Employment Period (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, as the 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 engage or plan to engage in such businesses. Nothing herein shall
prohibit Executive from (i) employment as a pharmacist in a retail pharmacy
business or in a pharmacy business maintained as part of a hospital, health
maintenance organization or other similar entity providing health services to
the public where such pharmacy business is only serving such entity providing
health services or (ii) 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.
9. Non-Solicitation. During the Employment Period and until the
later of (i) the third anniversary of the date of this Agreement and (ii) the
first anniversary of the expiration of the Employment Period (the
"Non-Solicitation Period"), 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 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,
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licensee or business relation and Sabratek or any such subsidiary (including,
without limitation, making any negative statements or communications about
Sabratek or its subsidiaries).
10. Enforcement. If, at the time of enforcement of paragraph 6, 7,
8 or 9 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 reasonable 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, Sabratek or its
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 9 and/or 10, 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 9 and 10 are reasonable.
11. 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
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company, 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.
12. Survival. Paragraphs 7 through 10 and paragraphs 12 through 20
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
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13. 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: Xxxxxxx X. Xxxxxxx
00 Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxxxxxxx, Esq.
Cossingham Law Office, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Notices to Sabratek: Sabratek Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Chief Executive Officer
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Berkshire
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.
14. 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 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.
15. Complete Agreement. This Agreement, the Purchase Agreement,
those documents expressly referred to herein and other documents of even date
herewith embody 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.
16. 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.
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17. Counterparts. This Agreement may be executive in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
18. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, 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.
19. 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.
20. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of Sabratek 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SABRATEK CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Its SVP and CEO
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XXXXXXX X. XXXXXXX
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SABRATEK CORPORATION
By
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Its
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/S/ Xxxxxxx X. Xxxxxxx
--------------------------------
XXXXXXX X. XXXXXXX
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