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EXHIBIT 10.42
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
December , 1999, by and between Xxxxxx X. Xxxxx, 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 Senior Vice
President and Chief Financial Officer 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, which duties will be
consistent with Employee's position and title.
SECTION 2 TERM OF EMPLOYMENT.
The term of Employee's employment hereunder (the "Term") shall be from
December 20, 1999 (the "Effective Date") until termination upon the occurrence
of any of the following events, provided that the Term shall expire on December
20, 2004 if not previously terminated and that Employer will give written notice
to Employee no later than December 20, 2003 if Employer is not going to renew
this Employment Agreement when the Term expires on December 20, 2004:
(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
five (5) 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". 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 misconduct or unlawful or improper activities
materially damaging to the business of Employer or an
affiliate of Employer, or (C) if
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Employee fails to comply with the terms of this
Agreement, and, within thirty (30) days after written
notice from Employer of such failure, Employee has
not corrected such failure or, having once received
such notice of failure and having so corrected such
failure, Employee at any time thereafter again so
fails, provided, that Employee will be given the
opportunity to explain his position in the matter at
a meeting of the Board of Directors of Employer prior
to any termination under this clause (C), or (D) if
Employee wilfully neglects or breaches his duties or
engages in intentional misconduct in discharging his
duties as an officer and employee of the Employer, or
(E) if Employee fails to meet the quarterly or annual
management business objectives specifically for
Employee that are mutually agreed to by the Chief
Executive Officer of Employer and Employee and such
failure has an adverse effect on Employer or its
stock price;
(III) The termination of this Agreement by Employee upon at
least ninety (90) days prior written notice;
provided, however, that in the event Employer has a
Form 10-K, Form 10-Q, or proxy statement that is
required to be filed with the Securities and Exchange
Commission ("SEC") during such ninety (90) day
period, such ninety (90) day period shall be extended
through the date on which such report or statement is
filed with the SEC;
(IV) The termination of this Agreement by Employer without
cause upon at least thirty (30) days prior written
notice; or
(V) The termination of this Agreement by mutual written
agreement of Employer and Employee.
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 Eighty Three Thousand Two
Hundred Sixty Dollars ($183,260.00) 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, but shall not be below
$183,260.00.
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(B) BONUS. For each calendar year during the Term
commencing with the year 2000, Employee will be
entitled to earn the following annual bonus based
upon the actual earnings per share (basic) achieved
by Employer for the calendar year ("Actual EPS"): (i)
if the Actual EPS equals the Average Analysists EPS
(as defined below) for the calendar year, Employee
will be entitled to an annual bonus of ten percent
(10%) of Salary for such calendar year; (ii) if the
Actual EPS equals or exceeds the Budget EPS (as
defined below) for the calendar year, Employee will
be entitled to an annual bonus of thirty-five percent
(35%) of Salary for such calendar year; and (iii) if
the Actual EPS exceeds the Average Analysists EPS for
the calendar year, but is less than the Budget EPS
for the calendar year, Employee will be entitled to
an annual bonus determined by multiplying the Salary
for the calendar year by the percentage which is
determined by the following calculation:
Actual EPS minus Average Analysist EPS
times 25% with the resulting percentage added to 10%
Budget EPS minus Average Analysis EPS
"Average Analysists EPS" shall mean the average of
all projected earnings per share (basic) for
Employer's stock that are established at the
beginning of the calendar year (as adjusted by the
analysists during the year for any acquisition by
Employer) by analysists who actually establish an
earnings per share projection for the year in
question.
"Budget EPS" shall mean the budgeted earnings per
share (basic) reflected in Employer's budgeted
financial statements that are established at the
beginning of the calendar year and approved by the
Chief Executive Officer of Employer, which may be
adjusted for any acquisition by Employer during the
calendar year. Any Bonus earned shall be paid
promptly upon the availability of annual financial
results for the previous calendar year (which is
expected to occur in the second month of the
following calendar year).
(C) CAR ALLOWANCE AND COUNTRY CLUB DUES. Employer shall
provide Employee with a monthly allowance of
$1,000.00 for automobile, country club dues, and
tax/financial planning for Employee.
(D) VACATION. Employee shall receive four (4) weeks
vacation time per calendar year during the term of
this Agreement commencing with the year 2000. Any
unused vacation days in any calendar year may not be
carried over to subsequent years.
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(E) EXPENSES. Employer shall reimburse Employee for all
reasonable and necessary expenses incurred by
Employee at the request of and on behalf of Employer.
Reimbursement requests will comply with the
Employer's procedures and policies and must be
approved by the Chief Executive Officer.
(F) 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 vice-president
executives of Employer, on the terms and subject to
the conditions set forth in such plans, including
without limitation Employer's 401(k) Plan. Employer
will obtain and maintain an individual disability
insurance policy for Employee that will supplement
Employer's group disability policy, with the annual
cost of such individual policy not to exceed
$5,000.00.
3.2 EFFECT OF TERMINATION. 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(ii)
hereof or a termination by Employee of Employee's employment pursuant to Section
2(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 year in which the
Termination Date occurs and with proration through the Termination Date). If
Employee's employment hereunder is terminated by Employer pursuant to Section
2(iv) 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)
during the Termination Period (as defined below) in periodic payments (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 participate in the benefit
plans and receive the other benefits set forth in Section 3.1(f) above during
the Termination Period without any additional expense to Employee. The
"Termination Period" shall mean a period that commences on the Termination Date
and continues thereafter for (i) nine (9) months if Employee is given notice of
termination by Employer under Section 2(iv) hereof prior to October 1, 2000,
(ii) ten (10) months if Employee is given notice of termination by Employer
under Section 2(iv) hereof during October 2000, (iii) eleven (11) months if
Employee is given notice of termination by Employer under Section 2(iv) hereof
during November 2000, and (iv) twelve (12) months if Employee is given notice of
termination by Employer under Section 2(iv) hereof after November 30, 2000.
If within thirty (30) days after the effective date of an
acquisition of Employer (by a merger, sale of assets, sale of stock, or
otherwise), Employer or its successor has not offered to Employee a position of
employment (under which employment Employee would have an office within a fifty
(50) mile radius of his home in Atlanta or a fifty (50) mile radius of the
Employer's office in Manchester, Georgia) that is mutually acceptable to
Employee and Employer or its successor, then Employee may thereafter resign from
his employment under Section 2(iii) above
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and in the event of such resignation Employer or its successor shall continue to
pay Employee his normal Salary pursuant to Section 3.1(a) during the Termination
Period in periodic payments (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 participate in the benefit plans and receive the other benefits set
forth in Section 3.1(f) above during the Termination Period without any
additional expense to Employee.
3.3 STAY-PUT BONUS. In the event Employer is acquired by
a third party (by merger or other combination, purchase of assets, purchase of
stock, or otherwise (the "Acquisition")) and Employee remains an employee of
Employer through the effective closing date of the Acquisition, Employee shall
earn and be paid a bonus by Employer or its successor in the amount of Two
Hundred Thousand Dollars ($200,000.00). If earned, such bonus shall be paid to
Employee no later than ten (10) days after the effective closing date of the
Acquisition.
SECTION 4 STOCK OPTIONS.
The Compensation Committee of the Board of Directors of the Employer
will grant to Employee options to purchase 50,000 shares of common stock of
Employer under and subject to Employer's 1998 Stock Incentive Plan (the "Plan"),
and Employer will use its best efforts to finalize such grant prior to January
1, 2000. The option price will be the closing stock price on the day the options
are granted by the Compensation Committee. The options will vest on the
following schedule under the Plan: 25% on the first anniversary date of the
Effective Date, 25% on the second anniversary date of the Effective Date, 25% on
the third anniversary date of the Effective Date, and 25% on the fourth
anniversary date of the Effective Date; provided, however, that all unvested
options will become fully vested and exercisable immediately prior to a Change
in Control with respect to Employer (as defined in the Plan).
SECTION 5 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
5.1 TRADE SECRETS. During the term of the Employee's
employment by the Employer and after the termination of such employment, whether
such termination is by the Employee or the Employer, the Employee shall not use
or disclose, or permit any unauthorized person access to, any Trade Secrets
belonging to the Employer or any third party whose Trade Secrets are in the
possession of the Employer.
5.2 CONFIDENTIAL INFORMATION. During the term of the
Employee's employment by the Employer and for a period of two (2) years after
termination of such employment, whether such termination is by the Employee or
by the Employer, the Employee shall not use or disclose, or permit any
unauthorized person access to, any Confidential Information belonging to the
Employer or any third party whose Confidential Information is in the possession
of the Employer.
5.3 DELIVERY OF INFORMATION. Upon request of the Employer
and in any event upon the termination of employment with the Employer, the
Employee shall deliver to the Employer all memoranda, notes, records, tapes,
documentation, disks, manuals, files, or other documents, and all copies
thereof, concerning or containing Confidential Information or Trade Secrets that
are in the Employee's possession, whether made or compiled by the Employee or
furnished to the Employee by the Employer.
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5.4 DEFINITION OF TRADE SECRETS. For purposes of this
Agreement, "Trade Secrets" shall refer to the trade secrets of the Employer as
that term is defined in the Official Code of Georgia Annotated, ss.10-1-761, as
amended from time to time. Trade Secrets also include any information described
herein which the Employer obtains from a third party, which Employer or such
third party treats as proprietary or designates as Trade Secrets, whether or not
owned or developed by the Employer.
5.5 DEFINITION OF CONFIDENTIAL INFORMATION. For purposes
of this Agreement, "Confidential Information" shall mean any data or
information, other than Trade Secrets, that is of value to the Employer and is
not generally known to competitors of the Employer and that is treated by the
Employer as confidential (whether or not such material or information is marked
"confidential"). To the extent consistent with the foregoing and to the extent
not Trade Secrets, Confidential Information includes, but is not limited to,
lists of any information about the Employer's executives and employees,
marketing techniques, price lists, pricing policies, business methods,
manufacturing processes and records, regulatory files and information, supplier
and vendor information and contracts, and financial information. Confidential
Information also includes any information described in this paragraph which the
Employer obtains from a third party, which the Employer or the third party
treats as proprietary or designates as Confidential Information, whether or not
owned or developed by the Employer.
SECTION 6 MISCELLANEOUS.
6.1 INDEMNIFICATION. Employee is entitled to
indemnification from Employer for claims against Employee in his capacity as an
officer or employee of Employer in the manner provided in the bylaws of Employer
and Georgia law.
6.2 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.
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6.3 NOTICES.
EMPLOYER: Horizon Medical Products, Inc.
ATTN: CHIEF EXECUTIVE OFFICER
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
EMPLOYEE: Xxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
6.4 BINDING EFFECT. This Agreement inures to the benefit
of, and is binding upon, Employer and its successors and assigns, and Employee,
together with Employee's executor, administrator, personal representative,
heirs, and legatees.
6.5 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.
6.6 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.
6.7 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.
6.8 SPECIFIC PERFORMANCE. Each party hereto hereby agrees
that any remedy at law for any breach of the provisions contained in Section 5
of 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.
6.9 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By:
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Xxxxxxxx X. Xxxx, Chief Executive Officer
EMPLOYEE:
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Xxxxxx X. Xxxxx
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