EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 20, 1995, between MEDIQ
Incorporated, a Delaware corporation ("MEDIQ"), MEDIQ/PRN Life Support Services,
Inc., a Delaware corporation, and PRN Holdings, Inc., a Delaware corporation
(together "MEDIQ/PRN"), and Xxx X. Xxxxxx (the "Executive").
BACKGROUND
WHEREAS, Executive is currently the Senior Vice President
and Chief Financial Officer of MEDIQ/PRN; and
WHEREAS, MEDIQ recognizes, in addition to Executive's other duties, the
significant responsibility of Executive with respect to assisting in the
possible sale MEDIQ/PRN; and
WHEREAS, MEDIQ acknowledges and recognizes that it would serve the best
interests of MEDIQ to assure itself of the continued employment of the Executive
as Senior Vice President and Chief Financial Officer of MEDIQ/PRN and the
assistance of Executive in maximizing the value received for MEDIQ/PRN in any
potential sale and that the compensation provided for herein represents the fair
value of the services to be provided by Executive with respect to maximizing
such value and with respect to the other services to be provided hereunder; and
WHEREAS, MEDIQ/PRN acknowledges and recognizes that it will receive
significant benefit from Executive continuing his employment with MEDIQ/PRN; and
WHEREAS, Executive desires to continue his employment with MEDIQ/PRN
and to render services to MEDIQ (while it owns MEDIQ/PRN) and MEDIQ/PRN on the
terms and conditions provided in this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending, to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1. CAPACITY AND DUTIES
1.1 Employment; Acceptance of Employment. MEDIQ/PRN
hereby employs Executive and Executive hereby accepts employment
by MEDIQ/PRN for the period and upon the terms and conditions
hereinafter set forth.
1.2 Capacity and Duties.
(a) Executive shall be employed by MEDIQ/PRN as
the Senior Vice President and Chief Financial Officer of MEDIQ/PRN and shall
perform such other executive duties and shall have such executive authority,
consistent with his position as may from time to time be specified by the
President of MEDIQ/PRN. From the date hereof until a Sale Event (as hereinafter
defined) occurs or any such sale or divestiture is finally abandoned by the
Board, Executive shall report directly and exclusively to the Board of Directors
of MEDIQ or any duly authorized committee thereof having authority over such
proposed sale or divestiture. Following any Sale Event or abandonment of such
sale or divestiture by the Board, Executive shall report as to all matters
hereunder to the President of MEDIQ/PRN.
(b) Executive shall devote his full working time,
energy, skill and best efforts to the performance of his duties hereunder, in a
manner which will faithfully and diligently further the business and interests
of MEDIQ and MEDIQ/PRN, and shall not be employed by or participate or engage in
or be a part of in any manner the management or operation of any business
enterprise other than MEDIQ or MEDIQ/PRN without the prior written consent of
the Board, which consent may be granted or withheld in its sole discretion.
SECTION 2. TERM OF EMPLOYMENT
2.1 Term. The initial term of Executive's employment hereunder
shall be eighteen months commencing on the date hereof and shall thereafter
automatically be renewed from year to year unless and until either party shall
give notice of his or its election to terminate Executive's employment at least
60 days prior to the end of the then-current term, unless earlier terminated as
hereinafter provided. Such initial term, and each renewal term are hereafter
referred to collectively as the "Contract Period."
SECTION 3. COMPENSATION
3.1 Basic Compensation.
As compensation for Executive's services
hereunder, MEDIQ/PRN shall pay to Executive a salary at the annual rate of
$165,000 (the "Base Salary"). Such Base Salary shall be payable in accordance
with MEDIQ/PRN's regular payroll practices in effect from time to time. Such
Base Salary shall be subject to increase based on normal periodic merit review
by the Compensation Committee of the Board of Directors of MEDIQ (the
"Compensation Committee") in accordance with the corporate
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policies of MEDIQ and MEDIQ/PRN (such annual base salary, including the
foregoing adjustments, if any, is hereinafter referred to as the "annual base
salary").
3.2 Performance Bonus. During the Contract Period,
Executive shall be entitled to receive an annual performance
bonus in accordance with the corporate bonus plan and policies of
MEDIQ/PRN as approved by the Compensation Committee.
3.3 Employee Benefits. In addition to the compensation
provided for in Section 3.1, Executive shall be entitled during the term of his
employment to participate in all of MEDIQ/PRN's employee benefit plans and
benefit programs as may from time to time be provided for other employees of
MEDIQ/PRN whose duties, responsibilities, and compensation are reasonably
comparable to those of Executive. If Executive becomes a participant in any
employee benefit plan, practice or policy of MEDIQ/PRN or its affiliates,
Executive shall be given credit under such plan for all service in the employ of
MEDIQ/PRN and any predecessors thereto or affiliates thereof prior to the date
hereof, for purposes of eligibility and vesting, benefit accrual and for all
other purposes for which such service is either taken into account or recognized
under the terms of such plan, practice or policy.
3.4 Vacation. Executive shall be entitled to
vacations which shall not be less than the annual vacation period
to which Executive is presently entitled.
3.5 Expense Reimbursement. During the term of his employment,
MEDIQ/PRN shall reimburse Executive for all reasonable expenses incurred by him
in accordance with its regular reimbursement policies as in effect from time to
time and upon receipt of itemized vouchers therefor and such other supporting
information as MEDIQ/PRN may reasonably require.
3.6 Transaction Compensation.
(a) If, during the term of this Agreement, a Sale
Event (as hereafter defined) occurs, Executive shall be entitled to receive a
one-time bonus calculated as provided in paragraph (b) below. For the purposes
of this Agreement, a "Sale Event" means any sale or divestiture of MEDIQ/PRN,
including a sale of substantially all of its stock (including through merger,
tender, exchange or otherwise) or assets, in either case in one or more related
transactions. Executive's bonus shall be paid in cash within 30 days after the
consummation of a Sale Event.
(b) Executive's bonus payable upon a Sale Event
shall equal the sum of (i) .025% of the aggregate purchase price paid for
MEDIQ/PRN up to a maximum aggregate purchase price of $375,000,000 plus (ii) if
the aggregate purchase price paid for
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MEDIQ/PRN exceeds $375,000,000, .15% of any purchase price in excess of
$375,000,000. For purposes of calculating the bonus, the aggregate purchase
price shall equal the sum of (x) the total cash consideration paid for MEDIQ/PRN
(including, without limitation, in respect of any warrants or other security of
MEDIQ or MEDIQ/PRN), plus (y) the fair market value of any securities or other
property received as consideration for MEDIQ/PRN (including, without limitation,
in respect of any warrants or other security of MEDIQ or MEDIQ/PRN), plus (z)
the aggregate amount (including without limitation, accrued but unpaid interest
and the unpaid amount of any capital leases) of any aggregate liabilities of
MEDIQ/PRN assumed or refinanced by the purchaser in connection with the
completion of the acquisition, other than current liabilities taken into account
in computing the working capital of MEDIQ/PRN (except for current liabilities
for indebtedness for money borrowed (including accrued but unpaid interest or
capital leases)). The aggregate purchase price on which Executive's bonus is to
be calculated is hereafter called "Enterprise Value" of MEDIQ/PRN. In the event
of any dispute between Executive and MEDIQ regarding the Enterprise Value of
MEDIQ/PRN on which Executive's bonus shall be calculated, the Board and
Executive shall select an investment banking firm, reasonably acceptable to each
of them, to make the determination of the Enterprise Value of MEDIQ/PRN. The
fees and expenses of the investment banking firm incurred in making such
determination shall be borne by MEDIQ, unless the investment banking firm shall
determine that the Executive's position regarding the calculation of Enterprise
Value was unreasonable under the circumstances, in which case such fees and
expenses shall be shared equally between MEDIQ and Executive.
(c) Executive acknowledges that a Sale Event may
not occur, that the Board may determine not to pursue a Sale Event, that such a
transaction can occur only upon proper authorization of the Board, or a duly
constituted committee thereof, and accordingly there can be no assurance that
any bonus will become payable to Executive under this Section.
(d) In the event that MEDIQ/PRN is sold or deemed
sold as part of an overall transaction involving the sale or other divestiture
of all of MEDIQ and/or its other partly or wholly owned subsidiaries,
Executive's bonus shall be paid based on the Enterprise Value of MEDIQ/PRN
implicit in such transaction if such Enterprise Value is readily ascertainable.
If the Enterprise Value of MEDIQ/PRN is not readily ascertainable in such
transaction, and the parties are unable to agree on the portion of the purchase
price representing the Enterprise Value of MEDIQ/PRN on which Executive's bonus
shall be calculated, the Board and Executive shall select an investment banking
firm reasonably acceptable to each of them, to make such determination. The
expenses of the investment banking firm incurred in making such determination
shall be borne by MEDIQ,
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unless the investment banking firm shall determine that the Executive's position
regarding the calculation of Enterprise Value was unreasonable under the
circumstances, in which case such fees and expenses shall be shared equally
between MEDIQ and Executive.
SECTION 4. TERMINATION OF EMPLOYMENT
4.1 Death of Executive. Executive's employment hereunder shall
immediately terminate upon his death, upon which MEDIQ/PRN shall not thereafter
be obligated to make any further payments hereunder other than amounts
(including salary, bonuses, expense reimbursement, etc.) earned or accrued as of
the date of Executive's death in accordance with generally accepted accounting
principles ("GAAP").
4.2 Disability of Executive. If Executive, in the reasonable
opinion of a physician selected by the Board, is unable, for any reason, to
perform his duties hereunder for a period of 180 consecutive days then the Board
shall have the right to terminate Executive's employment upon 30 days' prior
written notice to Executive at any time during the continuation of such
inability, in which event MEDIQ/PRN shall not thereafter be obligated to make
any further payments hereunder other than amounts (including salary, bonuses,
expense reimbursement, etc.) earned or accrued under this Agreement as of the
date of such termination in accordance with GAAP.
4.3 Termination for Cause. Executive's employment shall
terminate immediately upon notice that MEDIQ/PRN is terminating Executive for
"cause" (as defined herein), in which event MEDIQ/PRN shall not thereafter be
obligated to make any further payments hereunder other than amounts (including
salary, bonuses, expense reimbursement, etc.) earned or accrued under this
Agreement as of the date of such termination in accordance with GAAP. As used
herein "cause" shall include, without limitation the following, not corrected
after notice and a reasonable opportunity to cure:
(i) dishonestly;
(ii) fraud, theft or misappropriation or,
embezzlement of MEDIQ or MEDIQ/PRN's funds;
(iii) conviction of any felony, crime
involving fraud or misrepresentation, or of any other crime (whether or not
connected with his employment) the effect of which is likely to adversely affect
MEDIQ, MEDIQ/PRN or their affiliates;
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(iv) material breach of Executive's
obligations under this Agreement;
(v) repeated and consistent failure of
Executive to be present at work during normal business hours unless the absence
is because of a disability determined pursuant to Section 4.2;
(vi) willful violation of any express
direction or any rule or regulation established by the Board;
(vii) gross incompetence in the performance
of, or gross neglect of, Executive's duties hereunder;
(viii) illegal possession or use of any
controlled substance; or
(ix) use of alcohol or other drugs which
interferes with the performance by Executive of his duties.
4.4 Termination Without Cause.
(a) In the event
(i) Executive's employment is terminated
by MEDIQ/PRN for any reason other than cause or the death or
disability of Executive; or
(ii) this Agreement is not renewed by
MEDIQ/PRN at the end of any Contract Period on terms and conditions no less
favorable to Executive than those in effect at such time, MEDIQ/PRN shall
immediately pay Executive all amounts due under Section 3.1, 3.2, 3.3 and 3.4
(including Base Salary, Executive Benefits, expense reimbursements and
compensation for unused vacation time) earned or accrued as of the date of such
termination in accordance with GAAP. In such event, Executive shall also
continue to receive his then current Base Salary and employee benefits from
MEDIQ/PRN for eighteen months following the date of termination. Upon making
such payments, MEDIQ and MEDIQ/PRN shall have no further obligation to Executive
hereunder.
SECTION 5. RESTRICTIVE COVENANTS
5.1 Confidentiality. Executive acknowledges a duty of
confidentiality owed to MEDIQ and MEDIQ/PRN and shall not, at any time during or
after his employment by MEDIQ/PRN, retain in writing, use, divulge, furnish, or
make accessible to anyone, without the express authorization of the Board, any
trade secret, private or confidential information or knowledge of MEDIQ,
MEDIQ/PRN or any of their affiliates obtained or acquired by him
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while so employed. All computer software, telephone lists, customer lists, price
lists, contract forms, catalogs, books, records, and files acquired while an
employee of MEDIQ/PRN, are acknowledged to be the property of MEDIQ/PRN and
shall not be duplicated, removed from MEDIQ/PRN's possession or made use of
other than in pursuit of MEDIQ/PRN's business and, upon termination of
employment for any reason, Executive shall deliver to MEDIQ/PRN, without further
demand, all copies thereof which are then in his possession or his control.
5.2 Inventions and Improvements. During the term of his
employment, Executive shall promptly communicate to MEDIQ/PRN all ideas,
discoveries and inventions which are or may be useful to MEDIQ/PRN or its
business. Executive acknowledges that all ideas, discoveries, inventions, and
improvements which are made, conceived, or reduced to practice by him and every
item of knowledge relating to MEDIQ/PRN's business interests (including
potential business interests) gained by him during his employment hereunder are
the property of MEDIQ/PRN, and Executive hereby irrevocably assigns all such
ideas, discoveries, inventions, improvements, and knowledge to MEDIQ/PRN for its
sole use and benefit, without additional compensation. The provisions of this
Section shall apply whether such ideas, discoveries, inventions, improvements or
knowledge are conceived, made or gained by him alone or with others, whether
during or after usual working hours, whether on or off the job, whether
applicable to matters directly or indirectly related to MEDIQ/PRN's business
interests (including potential business interests), and whether or not within
the specific realm of his duties. Executive shall, upon request of MEDIQ/PRN, at
any time during or after his employment with MEDIQ/PRN, sign all instruments and
documents requested by MEDIQ/PRN and otherwise cooperate with MEDIQ/PRN to
protect its right to such ideas, discoveries, inventions, improvements, and
knowledge, including applying for, obtaining, and enforcing patents and
copyrights thereon in any and all countries.
5.3 Injunctive and Other Relief.
(a) Executive acknowledges and agrees that the
covenants contained herein are fair and reasonable in light of the consideration
paid hereunder, and that damages alone shall not be an adequate remedy for any
breach by Executive of his covenants contained herein and accordingly expressly
agrees that, in addition to any other remedies which MEDIQ/PRN may have,
MEDIQ/PRN shall be entitled to injunctive relief in any court of competent
jurisdiction for any breach or threatened breach of any such covenants by
Executive. Nothing contained herein shall prevent or delay MEDIQ/PRN from
seeking, in any court of competent jurisdiction, specific performance or other
equitable remedies in the event of any breach or intended breach by Executive of
any of its obligations hereunder.
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(b) Notwithstanding the equitable relief
available to MEDIQ/PRN, the Executive, in the event of a breach of his covenants
contained in Section 5 hereof, understands and agrees that the uncertainties and
delay inherent in the legal process would result in a continuing breach for some
period of time, and therefore, continuing injury to MEDIQ/PRN until and unless
MEDIQ/PRN can obtain such equitable relief. Therefore, in addition to such
equitable relief, MEDIQ/PRN shall be entitled to monetary damages for any such
period of breach until the termination of such breach, in an amount deemed
reasonable to cover all actual and consequential losses, plus all monies
received by Executive as a result of said breach and all costs and attorneys'
fees incurred by MEDIQ/PRN in enforcing this Agreement. If Executive should use
or reveal to any other person or entity any confidential information, this will
be considered a continuing violation on a daily basis for so long a period of
time as such confidential information is made use of by Executive or any such
other person or entity.
SECTION 6. MISCELLANEOUS
6.1 Arbitration.
(a) All disputes arising out of or relating to
this Agreement which cannot be settled by the parties shall promptly be
submitted to and determined by a single arbitrator in Philadelphia,
Pennsylvania, pursuant to the rules and regulations then obtaining of the
American Arbitration Association; provided that nothing herein shall preclude
MEDIQ or MEDIQ/PRN from seeking, in any court of competent jurisdiction,
damages, specific performance or other equitable remedies in the case of any
breach or threatened breach by Executive of Section 5 hereof. The decision of
the arbitrator shall be final and binding upon the parties, and judgement upon
such decision may be entered in any court of competent jurisdiction.
(b) Discovery shall be allowed pursuant to the
intendment of the United States Federal Rules of Civil Procedure and as the
arbitrators determine appropriate under the circumstances.
(c) Such arbitrator shall be required to apply
the contractual provisions hereof in deciding any matter submitted to it and
shall not have any authority, by reason of this Agreement or otherwise, to
render a decision that is contrary to the mutual intent of the parties as set
forth in this Agreement.
6.2 Prior Employment. Executive represents and
warrants that he is not a party to any other employment, non-
competition or other agreement or restriction which could
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interfere with his employment with MEDIQ/PRN or his or MEDIQ/PRN's rights and
obligations hereunder; and that his execution of this Agreement and the
performance of his duties hereunder will not breach the provisions of any
contract, agreement, or understanding to which is party or any duty owed by him
to any other person.
6.3 Severability. The invalidity or unenforceability of any
particular provision or part of any provision of this Agreement shall not affect
the other provisions or parts hereof. If any provision hereof is determined to
be invalid or unenforceable by a court of competent jurisdiction, Executive
shall negotiate in good faith to provide MEDIQ and MEDIQ/PRN with protection as
nearly equivalent to that found to be invalid or unenforceable and if any such
provision shall be so determined to be invalid or unenforceable by reason of the
duration or geographical scope of the covenants contained therein, such duration
or geographical scope, or both, shall be considered to be reduced to a duration
or geographical scope to the extent necessary to cure such invalidity.
6.4 Assignment. This Agreement shall not be assignable by
Executive, and shall be assignable by MEDIQ or MEDIQ/PRN only to any person or
entity which may become a successor in interest (by purchase of assets or stock,
or by merger, or otherwise) to MEDIQ or MEDIQ/PRN in the business or a portion
of the business presently operated by it. Subject to the foregoing, this
Agreement and the rights and obligations set forth herein shall inure to the
benefit of, and be binding upon, the parties hereto and each of their respective
permitted successors, assigns, heirs, executors and administrators.
6.5 Notices. All notices hereunder shall be in writing and
shall be sufficiently given if hand-delivered, sent by documented overnight
delivery service or registered or certified mail, postage prepaid, return
receipt requested or by telegram, fax or telecopy (confirmed by U.S. mail),
receipt acknowledged, addressed as set forth below or to such other person
and/or at such other address as may be furnished in writing by any party hereto
to the other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given as provided in this Agreement; provided that nothing
herein shall be deemed to affect the right of any party to serve process in (any
other manner permitted by law.
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(a) If to MEDIQ or MEDIQ/PRN:
MEDIQ Incorporated
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
With a copy to:
Drinker Xxxxxx & Xxxxx
1100 Philadelphia National Bank Building
Broad and Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(b) If to Executive:
Xxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
With a copy to:
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6.6 Entire Agreement and Modification. This Agreement
constitutes the entire agreement between the parties hereto with respect to the
matters contemplated herein and supersedes all prior agreements and
understandings with respect thereto. Any amendment, modification, or waiver of
this Agreement shall not be effective unless in writing. Neither the failure nor
any delay on the part of any party to exercise any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of any right, remedy,
power, or privilege with respect to any other occurrence.
6.7 Governing Law. This Agreement is made pursuant
to, and shall be construed and enforced in accordance with, the
internal laws of the State of New Jersey (and United States
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federal law, to the extent applicable), without giving effect to otherwise
applicable principles of conflicts of law.
6.8 Headings; Counterparts. The headings of paragraphs in this
Agreement are for convenience only and shall not affect its interpretation. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original and all of which, when taken together, shall be deemed
to constitute but one and the same Agreement.
6.9 Further Assurances. Each of the parties hereto shall
execute such further instruments and take such other actions as any other party
shall reasonably request in order to effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
MEDIQ Incorporated
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx, Esq.
MEDIQ/PRN Life Support Services, Inc.
By:/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
PRN Holdings, Inc.
By:/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
/s/ Xxx X. Xxxxxx
---------------------------------
Xxx X. Xxxxxx
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