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EXHIBIT 10.31
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of this 3rd day of April, 1998, 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, Employer desires to employ Employee, and Employee
desires to be employed by Employer, on the terms and conditions hereinafter set
forth;
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 Board of Directors of Employer
(the "Board of Directors") or the Chief Executive Officer of Employer may assign
Employee from time to time.
Section 2 Term of Employment.
The term of Employee's employment hereunder (the "Term") shall
be from April 1, 1998 (the "Effective Date") until the earlier of (a) March 31,
2003 or (b) the occurrence of any of the following events:
(i) The death or total disability of Employee (total disability
meaning the failure to fully perform his normal required
services hereunder for a period of six (6) consecutive months
during the Term hereof, as determined by the Board of
Directors, by reason of mental or physical disability);
(ii) 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 (A) if Employee is convicted of, pleads
guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement, (B) if Employee has engaged
in a dishonest act to the material damage or prejudice of
Employer or an affiliate of Employer, or in conduct or
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activities materially damaging to the business of Employer or
an affiliate of Employer, or (C) if Employee fails to comply
with the terms of this Agreement, and, within ninety (90) 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
(iii) 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 One Hundred Ninety Thousand Dollars
($190,000) 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). The Salary
shall be reviewed by the Board of Directors or the
Compensation Committee of the Board of Directors (the
"Compensation Committee") of Employer on at least an
annual basis.
(b) Bonus. Employee will be entitled to an annual bonus
(the "Bonus") equal to 50% of his Salary, based upon
the achievement during each fiscal year of the
Employer during the Term 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 calculated on
(x) with respect to the initial year of this
contract, April 1, 1998, and (y) with respect to each
year or period thereafter, the first day of the year
or period for which such Bonus may be paid. If such
increase in earnings per share is 35% or more, then
the Bonus for such year shall equal 100% of
Employee's Salary. Any Bonus earned shall be paid
promptly upon the availability of annual financial
results (which is expected to occur in the second
month of each year). Employee shall also be entitled
to receive a pro rated Bonus, calculated based on the
formula set forth above, for the period commencing
January 1, 2003 and terminating on March 31, 2003
based upon the achievement during such period of an
earnings per share increase of either 25% or 35%, as
described above. The earnings per share calculation
made with respect to the period commencing April 1,
1998 and ending December 31, 1998 shall be based on
the number of shares of Common Stock outstanding on a
fully
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diluted basis immediately following the consummation
of Employer's initial public offering of Common
Stock.
(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.
(d) Club Dues. Employee shall be reimbursed the
initiation fees and monthly dues of Marietta Country
Club or such other country club as Employee and
Employer shall approve so that this facility may be
used for client entertainment. Additionally, Employer
shall make an annual contribution, in Employee's
name, of $5,000 to the Florida State University Club
for membership in the Golden Chief Club.
(e) Vacation. Employee shall receive eight (8) 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.
(f) Expenses. Employer shall reimburse Employee for all
reasonable and necessary expenses incurred by
Employee at the request of and on behalf of Employer.
(g) Benefit Plans. 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)(ii) hereof or a
termination by Employee of Employee's employment
pursuant to
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Section 2(b)(iii) 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 (x) the date on which
the Bonus would have been paid had Employee continued
his employment hereunder if the Termination Date
occurs during December or (y) 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 Termination Date occurs. If
Employee's employment hereunder is terminated by
Employer pursuant to Section 2(b)(iii) hereof, 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 the remainder
of the Term hereunder in periodic payments or in a
lump sum, at the Option of Employee, but in no event
for less than three (3) years (on the same basis as
if Employee continued to serve as an employee
hereunder for such period) and Employee shall
continue to be eligible to receive the benefits set
forth in Sections 3.1(c) and 3.1(d) above and
participate in the benefit plans and receive the
other benefits sets forth in Section 3.1(g) above for
such period.
(b) Upon the occurrence of a Change in Control Event (as
defined below) and a termination of Employee's
employment as a result thereof, 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 Salary that would have been payable to
Employee under this Agreement for the lesser of (x) a
period of three years from the date of termination or
(y) the remainder of the Term hereunder, but in no
event for less than three years. The amounts payable
to Employee under the previous sentence of this
Section 3.2(b) shall be paid by Employer in periodic
payments 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 byss. 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 second
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:
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(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 xx.xx. 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.
(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
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to such excess) at the time that the amount
of such excess is finally determined.
For purposes of this Agreement a "Change in
Control Event" shall mean the occurrence of
any of the following:
(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, where Employee does
not vote as a director or stockholder of the
Company in favor of such plan;
(2) the adoption of a plan of liquidation or the
approval of the dissolution of Employer,
where Employee does not vote as a director
or stockholder of the Company in favor of
such liquidation or dissolution;
(3) the sale or transfer of substantially all of
the assets of Employer, where Employee does
not vote as a director or stockholder of the
Company for such sale or transfer;
(4) the following individuals cease for any
reason to constitute a majority of the
number of directors then serving:
individuals who, on the date hereof,
constitute the Board of Directors and any
new director (other than a director whose
initial assumption of office is in
connection with an actual or threatened
election contest, including but not limited
to a consent solicitation relating to the
election of directors of Employer) whose
appointment or election by the Board of
Directors or nomination for election by
Employer's stockholders was approved or
recommended by a vote of at least two-thirds
(2/3) of the directors then still in office
who either were directors on the date hereof
or whose appointment, election or nomination
for election was previously so approved or
recommended; or
(5) any individual, entity, group (within the
meaning ofss. 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and the
rules promulgated thereunder), or other
person acquires in a single transaction or a
series of transactions more than 30% of the
outstanding shares of Employer's Common
Stock, where Employee is not such person or
individual or is not an Affiliate (as
defined in Rule 405 under the Securities Act
of 1933, as amended) of such entity or a
part of such group.
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Section 4 Miscellaneous.
4.1 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.
4.2 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 at the following addresses:
EMPLOYER
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
EMPLOYEE
Xxxxxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(000) 000-0000
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.
4.3 Binding Effect. This Agreement inures to the benefit of,
and is binding upon, Employer and their respective successors and assigns, and
Employee, together with Employee's executor, administrator, personal
representative, heirs, and legatees.
4.4 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 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.
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4.5 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. 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.
4.6 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.
4.7 Specific Performance. Each party hereto hereby agrees that
any remedy at law for any breach of the provisions contained in this Agreement
shall be inadequate and that the other parties hereto shall be entitled to
specific performance and any other appropriate injunctive relief in addition to
any other remedy such party might have under this Agreement or at law or in
equity.
4.8 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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxxxx X. Xxxx
------------------------------------------
(printed name)
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxxx, Xx.
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EXHIBIT A
XXXXXXX XXXXXXXX
DISABILITY INCOME
Company Name Policy # Face Amount Premium
------------ -------- ----------- ---------
Northwestern Mutual D564707 $3,725/Month $1,830.10
Northwestern Mutual D677420 $ 875/Month $ 423.94
Northwestern Mutual D750477 $2,197/Month $1,167.23
Northwestern Mutual D1192808 $ 683/Month $ 510.89
