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Exhibit 10.5
EMPLOYMENT AGREEMENT
AGREEMENT by and among Maxxim Medical, Inc., a Texas corporation
(the "Company"), and Xxxx X. Xxxxxx (the "Executive"), dated as of the 12th day
of November, 1999.
The Company has determined that it is in the best interests of the
Company to assure that the Company will have the continued dedication of the
Executive following the merger (the "Merger") of the Company and Fox Xxxxx
Medic Acquisition Corporation, a Texas corporation ("Purchaser"), pursuant to
the Agreement and Plan of Merger, dated as of June 13, 1999 by and between
Purchaser and the Company (the "Merger Agreement") and to provide the Company,
as the surviving corporation after the Merger, with continuity of management
after the Merger. Therefore, in order to accomplish these objectives, the board
of directors of the Company has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the "Effective
Time" of the Merger (as defined in the Merger Agreement).
2. Employment Period. Subject to the consummation of the
transactions contemplated by the Merger Agreement, the Company hereby agrees to
continue to employ the Executive, and the Executive hereby agrees to continue
to be employed by the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
fifth anniversary thereof (the "Employment Period"); provided, however, that
commencing on the fifth anniversary of the Effective Date and on each annual
anniversary of such date (such fifth anniversary and each annual anniversary
thereof shall hereinafter be referred to as the "Renewal Date"), unless
previously terminated, the Employment Period shall be automatically extended so
as to terminate one year from the applicable Renewal Date, unless 90 days prior
to such Renewal Date the Company or the Executive shall terminate this
Agreement by giving notice to the other party that the Employment Period shall
not be so extended. Upon a "Change of Control" of the Company (as defined in
Annex I hereto), the Employment Period shall be the longer of (a) the actual
remaining Employment Period as of the date of the Change of Control and (b) 24
months.
3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive shall serve the Company in the position(s)
held by the Executive with the Company immediately prior to the Effective Date
or such other position(s) as may be assigned by Xxx Xxxxxxxx, the Chief
Executive Officer on the Effective Date (the "Current CEO"), from time to time,
and with the duties, status and responsibilities commensurate with such
position(s) and (B) the Executive's services shall be performed in Pinellas
County, Florida or such other location as may be assigned by the Current CEO,
from time to time.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote full attention and time during normal business hours to the
business and affairs of the Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a professional
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manner; provided, however that, pursuant to the Services Agreement by and among
the Company, Maxxim Medical Group, a Texas corporation, Circon Holdings
Corporation, a Delaware corporation ("Circon Holdings"), and Circon
Corporation, a Delaware corporation ("Circon"), dated as of November 12, 1999
(the "Services Agreement"), the Executive will, during the Employment Period
and any extensions thereto in accordance with this Agreement, to the extent
requested by the Company, perform services for Circon and Circon Holdings,
which, to the extent so requested, shall be deemed part of the Executive's
duties with the Company (provided that, unless such services are requested by
the Current CEO, the Executive shall be permitted not to perform such requested
services to the extent such services are inconsistent in any material respect
with the duties and status of the Executive hereunder and, in such event, such
duties shall not be deemed to be part of the Executive's duties with the
Company). It shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, in each case, so long as such activities do
not materially interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. For purposes hereof, service on corporate boards pursuant to
appointments after the date hereof shall be subject to the prior approval of
the Board of Directors of the Company (the "Board"), which shall not be
unreasonably withheld.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary of $175,000. The Annual Base
Salary shall be subject to increase (but not decrease) at the discretion of the
Compensation Committee of the Board (the "Compensation Committee") (the annual
base salary in effect from time to time, the "Annual Base Salary"). The Annual
Base Salary shall be payable in cash no less frequently than in equal monthly
installments.
(ii) Annual Bonus. For each fiscal year ending during the
Employment Period, the Executive shall be eligible to receive an annual bonus
(the "Annual Bonus"), based upon the terms and conditions of an annual bonus
program to be established by the Compensation Committee. Any such annual bonus
program shall provide that the Executive's annual bonus opportunity ("Target
Annual Bonus") shall be at least equal to 65% of the Executive's Annual Base
Salary, with the actual amount of the Annual Bonus determined based on actual
performance and in accordance with the terms of the annual bonus program.
(iii) Special Bonus. Pursuant to the terms of the Special Bonus
Program, the Company shall pay the Executive a special bonus as determined by
the Company (the "Special Bonus"). If the Executive's employment with the
Company is terminated for Cause or by the Executive other than for Good Reason
prior to any payment date of any portion of the Special Bonus, the unpaid
portion(s) of the Special Bonus shall be forfeited. If the Company terminates
the Executive's employment other than for Cause (including upon Disability) or
the Executive terminates employment for Good Reason (or due to death), the
unpaid portion(s) of the Executive's Special Bonus shall be paid as so
determined by the Company.
(iv) Employee Benefit and Compensation Plans. During the
Employment Period, except as otherwise expressly provided herein, the Executive
shall be
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eligible to participate in all employee benefit plans, practices, policies and
programs of the Company on terms and conditions that are no less favorable in
the aggregate than the terms and conditions in effect under the plans,
practices, policies and programs of the Company at the time of the execution of
the Merger Agreement.
(v) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office and secretarial support on at least
the same basis as and consistent with the Company's practices, policies and
programs as in effect at the time of the execution of the Merger Agreement.
(vi) Perquisites. During the Employment Period, the Executive
shall be eligible to receive perquisites on at least the same basis as and
consistent with the Company's practices, policies and programs as in effect at
the time of the execution of the Merger Agreement.
(vii) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation on at least the same basis as and consistent with
the Company's practices, policies and programs as in effect at the time of the
execution of the Merger Agreement.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 10(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time basis for
90 consecutive days as a result of incapacity due to mental or physical illness
or injury.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness or injury),
after a written demand for performance is delivered to the Executive by the
Board or the Chief Executive Officer of the Company, which identifies the
manner in which the Board or the Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties; or
(ii) the willful engaging by the Executive in misconduct which is
materially and demonstrably injurious to the Company or one of its affiliates.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
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(i) a termination of the Executive's service in the position(s)
set forth in Section 3(a)(i)(A) or as may be assigned by the Current CEO from
time to time;
(ii) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's status with respect to the Company
as in effect on the Effective Date or as may be assigned to the Executive by
the Current CEO from time to time or a substantial and adverse change in the
nature or status of the Executive's responsibilities from those in effect
immediately prior to the Effective Date or as may be assigned to the Executive
by the Current CEO from time to time, excluding for these purposes an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) a reduction in the Executive's Annual Base Salary;
(iv) a change in the Executive's work location other than as set
forth in Section 3(a)(i)(B) hereof;
(v) failure of the Company to comply with any material provision
of this Agreement, which is not cured within ten business days after a written
demand for compliance is delivered to the Company by the Executive specifically
identifying the manner in which the Executive believes that the Company has not
complied with the Agreement; or
(vi) any termination by the Company of the Executive's employment
not in accordance with the written notice provisions set forth in this
Agreement.
Notwithstanding the foregoing, the assignment of services pursuant
to the Services Agreement in accordance with Section 3(a)(ii) shall not
constitute Good Reason hereunder.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) specifies the termination
date (which date, in the case of a termination for Good Reason, shall be not
more than 30 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination by
the Company or the Executive, as the case may be, or the later date specified
therein, (ii) if the Executive's employment is terminated by the Company other
than for Cause, death or Disability, or the Executive resigns without Good
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Reason, the Date of Termination shall be the date on which the Company or the
Executive notifies the Executive or the Company, respectively, of such
termination and (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Employment Period,
the Company shall terminate the Executive's employment other than for Cause,
death or Disability, or the Executive shall terminate the Executive's
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 10 days after the Date of Termination the aggregate of the amounts set
forth in clauses A and B below:
A. the sum of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid ("Accrued
Obligations"); and
B. the amount equal to the product of (1) two and (2) the sum of
(x) the Executive's Annual Base Salary and (y) the Annual Bonus earned
by the Executive in the completed fiscal year immediately preceding the
Date of Termination; and
(ii) for the two-year period following the Date of Termination,
the Company shall continue to provide welfare benefits to the Executive on the
same basis as such benefits are provided to other employees of the Company from
time to time, but in any case, not less than those required by Section
3(b)(iv); provided, however, that during any period when the Executive is
eligible to receive such benefits under another employer-provided plan, the
benefits provided by the Company under this Section 5(a)(ii) may be made
secondary to those provided under such other plan; and
(iii) for the two-year period following the Date of Termination,
the Executive shall continue to participate in the Company's compensation plans
(other than any equity-based plans) on the same basis as such compensation
plans are provided to other employees of the Company from time to time, but in
any case, not less than those required by Section 3(b)(iv), to the extent
permitted by applicable law and the terms of such plans; provided however,
that, in the event the continued participation by the Executive is prohibited
by applicable law or by the terms of such plans, the Company shall pay the
Executive, within 30 days of the date from which continued participation is
determined to be prohibited, an amount in cash equal to the value of such
foregone participation, and, provided, further that in no event shall amounts
payable under this Section 5(a)(iii) be duplicative of any amounts otherwise
payable under this Agreement or otherwise;
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is entitled to receive
under any plan, program, policy or practice (excluding any severance plan or
policy) of the Company as of the Date of Termination (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits"); and
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(v) to the extent not previously paid, the Company shall pay to
the Executive the Special Bonus, on the date(s) contemplated by Section
3(b)(iii).
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits and the Special Bonus on the
date(s) contemplated by Section 3(b)(iii). Accrued Obligations and the Death
Benefit (as defined below) shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. For purposes of this Section 5(b), the term "Other Benefits,"
shall also include a death benefit equal to two times the sum of the
Executive's Annual Base Salary and Target Annual Bonus as in effect with
respect to the Executive on the date of the Executive's death (the "Death
Benefit"); provided, however, that to the extent the Executive's estate or
beneficiary, as applicable, is entitled to receive a death benefit in respect
of the Executive from any life insurance policy, plan or program provided by
and paid for by the Company, the Death Benefit shall be reduced by the amount
of such other benefits.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits and the Special Bonus on the date(s) contemplated by Section
3(b)(iii). Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. The term "Other Benefits" for
purposes of this Section 5(c) shall also include, and the Executive (or his
legal representatives) shall be entitled to receive, commencing on the first
business day of the first month immediately following the Disability Effective
Date, monthly disability payments, each of which shall be equal to 1/24th of
the amount equal to two times the sum of the Executive's Annual Base Salary and
Target Annual Bonus as in effect with respect to the Executive on the date of
the Disability Effective Date (the "Disability Benefit"), for the shorter of
(i) the period of Disability and (ii) 24 months (the "Disability Period");
provided, however, that, to the extent the Executive receives disability
benefits from any disability insurance policy, plan or program in respect of
such 24-month period provided by and paid for by the Company, the Disability
Benefit shall be reduced by (or the Executive shall reimburse the Company for)
the amount of such other benefits. During the Disability Period, the Company
shall pay the monthly premiums associated with the provision of COBRA benefits,
provided that during the Disability Period, the Company maintains an excess
reinsurance policy on the same terms and conditions as in effect on the
Effective Date.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates employment without
Good Reason (other than due to death or Disability) during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive the Accrued
Obligations and the Other Benefits.
6. Arbitration. Subject to the provisions of Section 7 hereof, the
Company and the Executive agree that any disputes with respect to this
Agreement shall be subject to
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binding arbitration in New York, New York, in accordance with the rules of the
American Arbitration Association. The proceedings and the results of such
arbitration shall be treated as confidential information subject to Section
7(a) hereof, except to the extent disclosure of such information is required by
law, and shall be final and binding on the parties thereto. Each party agrees
to pay for the costs of arbitration and its own attorney's fees and expenses
incurred as a result of such arbitration. The dispute shall be submitted to a
single arbitrator to be mutually agreed upon by the parties. If the parties
cannot agree on a single arbitrator, each party shall appoint one arbitrator
who shall then jointly appoint a third arbitrator. Judgment upon the
arbitration award may be entered in any court having jurisdiction.
7. Confidential Information/Nonsolicitation/Noncompetition. (a) The
Executive acknowledges that the Executive will have knowledge of certain trade
secrets of the Company, including, without limitation, information concerning
its client and customer lists and information concerning proprietary
manufacturing formulations and processes. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliates, and their respective businesses, (including, without limitation,
any client names, client lists, trade secrets, research, proprietary
manufacturing formulations and processes, secret data, business methods,
operating procedures or programs), which shall have been obtained by the
Executive during the Executive's employment by the Company and which shall not
be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement) (collectively,
the "Trade Secrets and Confidential Information"). After termination of the
Executive's employment with the Company, except as may be required by law, the
Executive shall not, without the prior written consent of the Board or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it or to an attorney retained by the Executive to provide legal
advice with respect to this Section 7. For the purposes of this Section 7(a),
information shall not be deemed to be publicly available merely because it is
embraced by general disclosures or because individual features or combinations
thereof are publicly available. All records, files, memoranda, reports,
customer lists, documents and the like that the Executive uses, prepares or
receives during the course of the Executive's employment shall remain the sole
property of the Company or one or more of its affiliates, as applicable, and
shall be turned over to the Company or its affiliates upon termination of the
Executive's employment.
(b) In view of the fact that the services to be rendered by the
Executive on behalf of the Company are of a special, unique and extraordinary
character, while employed by the Company or any of its affiliates and for two
years after the Executive's termination of employment, the Executive will not,
without the written consent of the Board, directly or indirectly: (i) attempt
in any manner to persuade any client or customer of the Company or any of its
affiliates to cease to do business or to reduce the amount of business which
any client or customer has customarily done or contemplates doing with the
Company or any of its affiliates; (ii) solicit business of any client or
customer of the Company or any of its affiliates unless such solicitations are
rendered as an employee of the Company or such affiliates; or (iii) render any
services of the type usually rendered by the Company or an affiliate for any
such client or customer of the Company or any of its affiliates (unless such
services are rendered as an employee of the Company or such affiliates), in the
case of clauses (i), (ii) and (iii), whether or
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not the relationship between the Company or such affiliate and such client or
customer was originally established, in whole or in part, through the
Executive's efforts.
(c) While employed by the Company or any of its affiliates and for
two years after the Executive's termination of employment, the Executive will
not, directly or indirectly, on behalf of the Executive or any other person,
solicit for employment by other than the Company or such affiliates any person
employed by the Company or its affiliates at the Effective Date, nor will the
Executive, directly or indirectly, on behalf of the Executive or any other
person, solicit for employment by other than the Company or such affiliates any
person employed at the time by the Company or its affiliates. For purposes of
Sections 7(b), (c), (d) and (e), "affiliate" should only include affiliates of
the Company for which the Executive performs or has performed services.
(d) While employed by the Company or any of its affiliates and for
two years after the Executive's termination of employment, the Executive will
not, directly or indirectly, for the Executive's own account or the account of
others, own, manage, operate, control or participate in the ownership,
management, operation or control of or be connected as a principal, employee,
officer, director, independent contractor, representative, stockholder,
financial backer, partner, advisor, manager, consultant or in any other
individual or representative capacity with any business which engages in any
business within any market area served by the Company or any of its affiliates
involving the development, manufacture, distribution or marketing of any
hospital or medical products of the type developed, manufactured, distributed
or marketed by the Company or its affiliates at any time within two years prior
to the termination of the Executive's employment (a "Competing Business").
Ownership for personal investment purposes only of less than 5% of the voting
stock of any publicly held Competing Business shall not constitute a violation
hereof.
(e) The Executive acknowledges and agrees that: (i) the purposes of
the foregoing covenants, including without limitation the noncompetition
covenant of Section 7(d), are to protect the goodwill and Trade Secrets and
Confidential Information of the Company and its affiliates for whom the
Executive performs services under this Agreement, and to prevent the Executive
from interfering with the business of the Company and such affiliates as a
result of or following termination of the Executive's employment with the
Company; (ii) that the foregoing covenants, including without limitation the
noncompetition covenant of Section 7(d), are being given in part in
consideration for the consideration being received by the Executive as a result
of the transactions contemplated by the Merger Agreement; (iii) because of the
nature of the business in which the Company and its affiliates are engaged and
because of the nature of the Trade Secrets and Confidential Information to
which the Executive has access, it would be impractical and excessively
difficult to determine the actual damages of the Company and its affiliates in
the event the Executive breached any of the covenants of this Section 7; and
(iv) remedies at law (such as monetary damages) for any breach of the
Executive's obligations under this Section 7 would be inadequate. The Executive
therefore agrees and consents that if the Executive commits any breach of a
covenant under this Section 7 or threatens to commit any such breach, the
Company and its affiliates shall have the right (in addition to, and not in
lieu of, any other right or remedy that may be available to it) to temporary
and permanent injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of proof of actual
damage. With respect to any provision of this Section 7
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finally determined by a court of competent jurisdiction to be unenforceable,
the Executive, the Company and its affiliates hereby agree that such court
shall have jurisdiction to reform this Agreement or any provision hereof so
that it is enforceable to the maximum extent permitted by law, and the parties
agree to abide by such court's determination. If any of the covenants of this
Section 7 are determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be a bar to or in any way diminish
the right of the Company or its affiliates to enforce any such covenant in any
other jurisdiction.
(f) The provisions of Sections 7(b), (c), (d) and (e) shall remain
in full force and effect until the expiration of the period specified herein
notwithstanding the earlier termination of the Executive's employment
hereunder.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive, whether pursuant to this
Agreement or otherwise (but determined without regard to any additional
payments required under this Section 8) (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended and the rules, regulations and interpretations thereunder (the "Code"),
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Xxxxxx
Xxxxxxxx or such other "Big Five" public accounting firm reasonably acceptable
to the Executive as may be designated by the Board (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and
the Executive within 30 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 8, shall be paid by the Company to the Internal Revenue Service
directly on the later of (i) the due date for the payment of any Excise Tax,
and (ii) the receipt of the Accounting Firm's determination. Any determination
by the Accounting Firm shall be binding upon the Company and the Executive. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine
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the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment or Underpayment. Such notification shall
be given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time (provided the
Company may select an attorney to represent the Executive in connection with
such claim, which attorney shall be reasonably acceptable to the Executive);
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, including legal fees, and shall indemnify and hold the
Executive harmless for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
reasonably determine, and not to take any positions contrary to those taken by
the Company; provided, however, that if the Company directs the Executive to
pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless for any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
such
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contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to control the proceedings, settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
9. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and permitted assigns; provided, however,
that the Company may not assign in whole or in part its rights, obligations and
benefits under this Agreement except as contemplated by Section 9(c) hereof
without the prior written consent of the Executive.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, or any business
of the Company for which the Executive's services are principally performed, to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise. As used herein, the term "affiliate" shall mean any company
controlled by, controlling or under common control with the Company.
10. General Provisions. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Company: Maxxim Medical, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: 000-000-0000
Copy to: Fox Xxxxx & Company, LLC
000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxx
Facsimile: 000-000-0000
Copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Facsimile: 212-403-2000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Executive shall not be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, such amounts shall
not be reduced whether or not the Executive obtains other employment except as
provided in Sections 5(a)(ii), 5(b) and 5(c), in each case only to the extent
specifically set forth therein.
(e) The parties agree to treat all amounts paid to the Executive
hereunder as compensation for services. Accordingly, the Company may withhold
from any amounts payable
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under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(f) On and after the Effective Date, this Agreement shall supersede
any other agreement, written or oral, between the Company or any of its
affiliates and the Executive, including, without limitation, the Executive
Continuity Agreement, dated as of August 31, 1998, and the Investor
Participation Agreement, dated as of June 13, 1999, as amended. This Agreement
shall automatically terminate and be of no force and effect if the Executive
dies prior to the Effective Date.
(g) This Agreement may be executed in counterparts, which together
shall constitute one and the same original.
(h) To the fullest extent permitted by law, the Company shall
indemnify the Executive (including the advancement of expenses) for any
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, incurred by the Executive in connection with the defense of
any lawsuit or other claim by third parties to which he is made a party by
reason of being an officer, director or employee of the Company, any of its
subsidiaries or any of the Company's affiliates for whom the Executive performs
services under this Agreement. During the Employment Period and for at least
three (3) years thereafter, the Company shall maintain customary director and
officer liability insurance covering the Executive for acts and omissions prior
to and during the Employment Period.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Boards of Directors, the
Company has caused these presents to be executed in its name on its behalf, all
as of the day and year first above written.
/s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
MAXXIM MEDICAL, INC., a Texas corporation
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
By: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board,
President and Chief Executive Officer
Maxxim Medical, Inc., a Delaware corporation, shall be a party
hereto and a direct obligor of all payments and benefit obligations hereunder.
MAXXIM MEDICAL, INC., a Delaware corporation
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
By: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board,
President and Chief Executive Officer
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ANNEX I
For purposes of this Agreement "Change of Control" shall mean: (i) the
acquisition by any "Person" or "group" (as such terms are used in Regulation
13D under the Securities Exchange Act of 1934, as amended), other than Fox
Xxxxx & Company, LLC or any of its "affiliates" (as defined below) or any
"Person" or "group" that is a stockholder of the Company immediately after the
Effective Time of beneficial ownership of a majority or more of the Company's
outstanding voting securities; or (ii) any sale, lease, exchange or other
transfer in one transaction or a series of related transactions, other than a
transfer to an entity which is majority controlled by Fox Xxxxx & Company, LLC
or any affiliate thereof, any of the "Person" or "group" that is a stockholder
of the Company immediately after the Effective Time or any entity with
substantially the same equity holders as the Company immediately prior to such
transfer, of all or substantially all of the assets of the Company or its
operating subsidiaries (taken together). For purposes of this Annex I,
"affiliate" of Fox Xxxxx & Company, LLC shall mean a person or entity directly
or indirectly controlled by, controlling or under common control with Fox Xxxxx
& Company, LLC and their equity holders.
