Home Diagnostics, Inc. Letterhead] February 2, 2010
Exhibit 10.1
EXECUTION VERSION
[Home Diagnostics, Inc. Letterhead]
February 2, 2010
Xxxxxx X. Xxxxxx
0000 Xxxxxxx Xxx
Xxxx Xxxxxx, Xxxxxxx 00000
0000 Xxxxxxx Xxx
Xxxx Xxxxxx, Xxxxxxx 00000
| Re: | Amendments to Employment Agreement. |
Dear Xx. Xxxxxx:
We are parties to an Employment Agreement dated as of February 23, 2009 (the “Employment
Agreement”) relating to your employment as the President and Chief Executive Officer of Home
Diagnostics, Inc. (the “Company”). All capitalized terms used without definition in this
letter agreement will have the respective meanings provided in the Employment Agreement.
As of the date of this letter agreement, the Company has entered into an Agreement and Plan of
Merger (the “Merger Agreement”) between the Company, Nipro Corporation (“Nipro”)
and Nippon Product Acquisition Corporation (the “Acquisition Corporation”). In connection
with the transactions contemplated by the Merger Agreement, we have agreed upon the amendments to
the Employment Agreement provided in this letter agreement, as follows:
1. The amendments to the Employment Agreement provided in this letter agreement will become
effective immediately prior to the acceptance for payment by the Acquisition Corporation of shares
of the Company’s common stock pursuant to the tender offer contemplated by the Merger Agreement.
The date as of which such amendments become effective is referred to in this letter agreement as
the “Effective Date.” If the Merger Agreement is terminated in accordance with its terms
for any reason prior to such acceptance, this letter agreement will be deemed to terminate
simultaneously.
2. The Term of your employment pursuant to the Employment Agreement will terminate on the
first anniversary of the Effective Date, unless earlier terminated as provided in the Employment
Agreement.
3. During the Term of your employment, you will be entitled to receive payment of your Base
Salary from the Company at an annual rate of $500,000, payable in bi-weekly installments or in such
other installments as may be agreed upon.
4. You will be entitled to receive a payment from the Company of $250,000 in cash within five
business days after the Effective Date.
5. Provided that you continue to serve as an active full-time employee of the Company until
the first anniversary of the Effective Date, you will be entitled to receive a payment from the
Company of $250,000 in cash within five business days after such first
anniversary date. You will also be entitled to receive the foregoing payment if either (a) the
Company terminates your employment without Cause prior to the first anniversary of the Effective
Date or (b) you terminate your employment for Good Reason prior to the first anniversary of the
Effective Date.
6. You will be designated as President of the Company (rather than President and CEO), will
not serve as a director of the Company and will report to a group of senior officers of Nipro and
its affiliates, rather than to the Company’s board of directors. You agree that those changes in
your duties, responsibilities and status shall not constitute “Good Reason” for the
purposes of Section 4(d)(i) of the Employment Agreement.
7. You will not be entitled to any bonus compensation under the Employment Agreement, whether
relating to periods prior to or after the Effective Date, other than the payments provided in
paragraphs 4 and 5 of this letter agreement. Specifically, you will not be entitled to any bonus
payments pursuant to Section 3(b), 3(e), 3(k), 5(b)(ii), 5(d)(iii) or 5(e)(iii) of the Employment
Agreement.
8. You will not be entitled to any additional equity compensation awards by the Company or
Nipro or any of its affiliates. Specifically, you will not be entitled to any additional stock
option or stock appreciation right awards pursuant to Section 3(i) or 3(j) of the Employment
Agreement.
9. You will not be entitled to any severance or other compensation or continuation employment
benefits in connection with the termination of your employment with the Company for any reason,
other than your right to receive (i) payment of your Base Salary through the date of the
termination of your employment, (ii) payment for any accrued but unused vacation time in accordance
with the Company’s regular vacation policies and (ii) the payment provided in paragraph 5 of this
letter agreement under the circumstances set forth therein. Specifically, you will not be entitled
to any payments pursuant to Section 5(d)(ii) or 5(e)(ii) of the Employment Agreement.
10. Sections 19 (POST-EMPLOYMENT NON-COMPETITION AGREEMENT) and 20 (ADDITIONAL POST-EMPLOYMENT
NON-COMPETITION TERMS) of the Employment Agreement shall terminate and be of no further force or
effect.
11. The severance benefits to which you are or may become entitled pursuant to the Employment
Agreement, as amended by this letter agreement, are hereinafter referred to as the “Severance
Benefit payments.”
(a) In the event that any or all of the Severance Benefit payments are treated as excess
parachute payments under Internal Revenue Code Section 280G, then your Unreduced and Reduced Net
Benefit (each defined below) shall be determined and the Severance Benefit payments shall be
adjusted in accordance with subparagraph (d) below.
(b) For purposes of subparagraph (d) below, the Unreduced Net Benefit shall equal the
Severance Benefit payments (plus the amount of any other payment to you classified as a parachute
payment under the provisions of Code Section 280G), less the amount of federal, state and local
income and other taxes (including the excise tax under Code Section 4999) payable with respect to
such benefits. For these purposes, the federal, state, local and any other taxes shall be
calculated at the maximum marginal income tax rates applicable to you for each year in which the
foregoing amounts shall be paid.
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(c) For purposes of subparagraph (d) below, the Reduced Net Benefit shall equal the amount
determined under the principles of subparagraph (b) above, but with the Severance Benefit payments
first reduced by an amount such that the present value of all payments and benefits that you
receive or are entitled to receive from the Company that would constitute “parachute payments”
within the meaning of Code Section 280G does not exceed 2.99 times your “base amount,” as defined
under Code Section 280G. For purposes of calculating the aggregate present value of such parachute
payments, the requirements of Code Section 280G shall be followed.
(d) If your Reduced Net Benefit is greater than the Unreduced Net Benefit, then the
amount of the Severance Benefit payments shall be reduced to an aggregate present value amount that
does not subject any of the payments to the excise tax under Code Section 4999.
(e) An independent accounting firm shall perform any and all calculations required under Code
Section 280G, and shall determine your Reduced and Unreduced Net Benefit. Such determination shall
be made within 10 business days of the date severance benefits become due pursuant to the
Employment Agreement, as amended by this letter agreement. In the event a reduction of the
Severance Benefit payments is to be made pursuant to subparagraph (d) above, you shall have
discretion (in conjunction with the Company) to determine which and how much of the Severance
Benefit payments shall be eliminated or reduced consistent with the requirements of this letter
agreement and the Employment Agreement. Such decision shall be made no later than 5 business days
following the determination by the independent accounting firm of your Reduced and Unreduced Net
Benefit.
All compensation payable pursuant to this letter agreement and the Employment Agreement will be
subject to withholding and other applicable taxes. Except as otherwise expressly modified pursuant
to this letter agreement, the Employment Agreement will continue in full force and effect in
accordance with its terms.
The provisions included in Sections 23 and 24 of the Employment Agreement are incorporated by
reference and made a part of in this letter agreement.
If the foregoing correctly sets forth our agreement and understanding, please execute the
enclosed counterpart of this letter agreement and return the executed counterpart to the Company.
| HOME DIAGNOSTICS, INC. | ||||
/s/ Xxxxx Xxxxxx
|
||||
| Its: General Counsel |
Xxxxxx and accepted this
February 2, 2010:
February 2, 2010:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
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