Exhibit 10.40
CHANGE OF CONTROL AGREEMENT
AGREEMENT made as of this 1st day of April, 2000, between Meridian
Medical Technologies, Inc., a Delaware corporation (hereinafter "Company"),
and Xxxxxx X. Xxxxxxx (hereinafter "Executive").
WHEREAS, the Company wishes to assure the continued availability of
the Executive's services and to create an environment which will promote the
Executive's giving impartial and objective advice in circumstances resulting
from the possibility of a Change of Control (as herein defined) of the
Company; and
WHEREAS, the Company and the Executive wish to provide the Executive
with financial protection in the event significant changes in the Executive's
employment status occur following a Change of Control of the Company.
NOW, THEREFORE, the Company and the Executive, in consideration of
the terms and conditions set forth herein and other valuable consideration,
receipt and sufficiency of which are hereby acknowledged, mutually covenant
and agree as follows:
1. TERM.
The term of this Agreement shall commence on the date hereof and
terminate on April 1, 2003 unless the Executive's employment with the Company
or a subsidiary is sooner terminated prior to a Change of Control in which
case it will terminate upon the termination of the Executive's employment
(the "Term"), provided, however, if a Change of Control occurs prior to April
1, 2003, then this Agreement will terminate on the second anniversary of the
Change of Control.
2. PAYMENTS UPON CHANGE OF CONTROL AND TERMINATION EVENT.
The Company shall make payments to the Executive as provided for in
paragraph 4 hereof upon the occurrence of both a Change of Control of the
Company and a Termination Event, as such terms are defined in paragraph 3.
3. DEFINITIONS.
(a) "Base Salary" shall mean an amount equal to the Executive's
highest annual base salary after the date hereof and preceding a Termination
Event.
(b) "Cause" means (i) the Executive's failure or refusal to perform
satisfactorily any duties reasonably required of the Executive by the Company
(other than by reason of disability), after reasonable demand for substantial
performance is delivered by the Company specifically identifying the manner
in which the Company believes the Executive has not performed his duties;
(ii) the commission by the Executive of a felony or the perpetration by the
Executive of a dishonest act against or breach of fiduciary duty toward the
Company or any of its customers, employees, or vendors; or (iii) any willful
act or omission by the Executive which is injurious in any material respect
to the financial condition or business reputation of the Company. For
purposes of this definition, 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 act or omission was
in the best interests of the Company.
(c) A "Change of Control" shall be deemed to have occurred if any of
the following have occurred prior to the expiration of the Term:
(i) any person or group of persons (as defined in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended ("1934
Act")) together with its affiliates, excluding employee benefit plans of the
Company, is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the 0000 Xxx) of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities;
(ii) as a result of a proxy contest, individuals who prior
to the conclusion thereof constituted the Board of Directors of the Company
(the "Board") (including for this purpose any new director whose election or
nomination for election by the Company's shareholders in connection with such
proxy contest was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors prior to such proxy
contest) cease to constitute at least a majority of the Board (excluding any
Board seat that is vacant or otherwise unoccupied);
(iii) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board (excluding any Board seat that is vacant or otherwise
unoccupied);
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity regardless
of which entity is the survivor, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior to continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
(v) the stockholders of the Company approve a plan of
complete liquidation or winding-up of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets; or
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(vi) any other event which the Board of Directors
determines should constitute a Change of Control.
(d) A "Termination Event" shall be deemed to have occurred if,
within the twenty-four (24) month period following a Change of Control, (1)
the Executive's employment with Company is terminated by the Company without
Cause, other than by reason of death, disability or retirement; or (2) the
Executive voluntarily terminates his employment with the Company within 30
days after the occurrence of any of the following events:
(i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities immediately prior to the Change of Control, or any other
action by the Company which results in a diminution in any material respect
in such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof, as the same may be increased
from time to time;
(iii) the Company's requiring the Executive to be based at
any office or location that is more than fifty (50) miles from the
Executive's office or location immediately prior to the Change of Control;
(iv) the failure by the Company (i) to continue in effect
any bonus, stock option, or other cash or equity-based incentive plan in
which the Executive participates immediately prior to a Change in Control
that is material to the Executive's total compensation, unless an arrangement
not materially less favorable to the Executive (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or
(ii) to continue the Executive's participation in such plan (or in such
substitute or alternative plan) on a basis at least as favorable, both in
terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed immediately prior to
the Change of Control; or
(v) the failure by the Company to continue to provide the
Executive with benefits that in the aggregate are not materially less
favorable to the Executive than those received by the Executive under the
Company's pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans in which the
Executive was participating, at costs not materially greater than to those
paid by the Executive, immediately prior to the Change of Control.
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1. CASH PAYMENTS.
In the event of a Termination Event, the Company agrees to continue
to pay to the Executive, the Executive's Base Salary for a period of twelve
(12) months.
2. DEATH OF EXECUTIVE.
If the Executive dies before receiving all payments payable to him
under paragraph 4 of this Agreement, the Company shall continue to make
payments pursuant to paragraph 4 hereof to the Executive's spouse, or if the
Executive leaves no spouse, to the estate of the Executive.
3. HEALTH AND LIFE INSURANCE BENEFITS.
The Company agrees to maintain, for a period of twelve (12) months
following the date of the occurrence of a Termination Event, the Executive's
eligibility for and participation in any health and life insurance plans
("Insurance Benefits"), in which the Executive was eligible to participate
prior to the Termination Event and upon the same basis and cost as prior to
the Termination Event, provided however, that if, for any reason, the Company
is unable to continue the Executive's participation in any such plan, the
Company shall cause the Executive to be eligible to participate in a
substantially equivalent arrangement upon substantially the same basis and
cost as prior to the Termination Event. Notwithstanding any other provision
of this Agreement to the contrary, if in connection with the termination of
the Executive's employment for any reason the Company is obligated by law or
by contract (including any employment or severance agreement other than this
Agreement) or by Company plan or policy to provide the Executive with life or
health insurance after the Executive's termination (or a cash payment in lieu
thereof), then any Insurance Benefits hereunder shall be reduced by the
amount of any payments and similar benefits described above, as applicable.
4. NO DUTY TO SEEK OTHER EMPLOYMENT.
Amounts payable to the Executive under this Agreement shall not be
reduced by the amount of any compensation received by the Executive from any
other employer or source, and the Executive shall not be under any obligation
to seek other employment or gainful pursuit as a result of this Agreement.
5. REDUCTION OF PAYMENTS.
Notwithstanding any other provision of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change of Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement (all such payments and benefits, including the
payments and benefits provided for hereunder, being hereinafter called "Total
Payments") would not be deductible (in whole or part), by
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the Company, an affiliate or other person or entity making such payment or
providing such benefit as a result of section 280G of the Internal Revenue
Code of 1986, as amended, then, to the extent necessary to make such portion
of the Total Payments deductible, (A) the cash payments provided for by
paragraph 4 hereof shall first be reduced (if necessary, to zero), and (B)
the benefits provided for by paragraph 7 hereof shall next be reduced. For
purposes of this limitation, no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have waived by written notice to the
Company prior to the date of payment shall be taken into account. All
determinations required to be made under the provisions of this paragraph 8
hereof shall be made by tax counsel selected by the Company's independent
auditors and reasonably acceptable to the Executive.
6. PAYMENT OF COMPENSATION TO TERMINATION DATE.
In addition to any other payments payable to the Executive
hereunder, the Company shall pay the Executive full compensation and all
other amounts and benefits to which the Executive is entitled through the
termination of his employment.
7. NO RIGHT TO CONTINUED EMPLOYMENT.
This Agreement shall not confer upon the Executive any right with
respect to continuance of employment by the Company or any subsidiary, nor
shall it interfere in any way with the right of his employer to terminate his
employment at any time. No payments hereunder shall be required except upon
the occurrence of both a Change of Control of the Company and a Termination
Event. Thus, except as specifically provided herein, no payments hereunder
shall be made on account of termination of the Executive's employment (i)
upon the Executive's death, disability or retirement, (ii) by the Company
with or without cause or (iii) upon the Executive's voluntary termination.
8. WAIVER OF BREACH.
Waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed as a waiver by such party of any
subsequent breach hereof.
9. INVALIDITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision, which shall remain in full force and effect.
10. ENTIRE AGREEMENT; WRITTEN MODIFICATION; TERMINATION.
This Agreement contains the entire agreement between the parties
concerning the matters covered hereby. No modification, amendment or waiver
of any provision hereof shall be effective unless in writing specifically
referring hereto and signed by the party against whom such provision as
modified or amended or such waiver is sought to be
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enforced. This Agreement shall terminate as of the time the Company makes the
final payment which it may be obligated to pay hereunder or provide the final
benefit which it may be obligated to provide hereunder. This Agreement
supersedes and replaces any earlier agreement on the subject matter hereof.
11. COUNTERPARTS.
This Agreement may be made and executed in counterparts, each of
which may be considered an original for all purposes.
12. GOVERNING LAW.
This Agreement is governed by and is to be construed and enforced in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned parties have executed or caused
to be executed this Agreement as of the day and year first above written.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
By:
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"EXECUTIVE"
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