EXHIBIT 10(Z)
EMPLOYMENT AGREEMENT
AGREEMENT dated this 19th day of May, 1999, by and between MediVators,
INC., a Minnesota corporation (the "Company"), and XXX X. XXXXXX (the
"Employee").
Introduction
Employee is being employed by the Company as an executive officer. The
parties desire to enter into an employment agreement and to set forth herein the
terms and conditions of Employee's employment by the Company. Accordingly, in
consideration of the mutual covenants and agreements set forth herein and the
mutual benefits to be derived here from, and intending to be legally bound
hereby, the Company and Employee agree as follows:
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is hereby agreed by and between the Company and Employee as follows:
1. Engagement and Term. The Company hereby employs Employee and Employee
hereby accepts such employment by the Company on the terms and conditions set
forth herein, for the period commencing on May 19, 1999 (the "Effective Date")
and ending, unless sooner terminated in accordance with the provisions of
Section 4 hereof, on July 31, 2002 (the "Employment Period"). As used in this
Agreement, the term "Contract Year" shall refer to each twelve-month period
during the Employment Period ending July 31; provided, however, that the
"Initial Contract Year" shall be deemed the period commencing on May 19, 1999
and ending on July 31, 2000.
2. Scope of Duties. Employee shall be employed by the Company as its
President and Chief Executive Officer. In such capacities, Employee shall have
such authority, powers and duties customarily attendant upon such offices. If
elected or appointed, Employee shall also serve, without additional
compensation, in one or more offices and, if and when elected, as a director of
the Company or any subsidiary or affiliate of the Company, provided that his
duties and responsibilities are not inconsistent with those pertaining to his
position as stated above. Employee agrees to perform the duties associated with
his employment to the best of his abilities, and shall faithfully devote his
full business time and efforts so as to advance the best interests of the
Company. During the Employment Period, Employee shall not be engaged in any
other business activity, whether or not such business activity is pursued for
profit or other pecuniary advantage, unless otherwise approved in writing by the
Board of Directors of Cantel Industries, Inc. ("Cantel").
3. Compensation.
3.1 Basic Compensation. In respect of services to be performed by
Employee during the Employment Period, the Company agrees to pay Employee a base
salary ("Basic Compensation") at the rate of $175,000 per annum during the
Initial Contract Year, payable in accordance with the Company's customary
payroll practices for executive employees.
The Base Salary shall be increased annually by an amount
established by reference to the "Consumer Price Index for Urban Wage Earners and
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Clerical Workers, Minneapolis, Minnesota, all items - Series A-01" published by
the Bureau of Labor Statistics of the United States Department of Labor (the
"Consumer Price Index"). The base period shall be the month ended March 31, 1999
(the "Base Period"). If the Consumer Price Index for the month of March in any
year, commencing in 2000, is greater than the Consumer Price Index for the Base
Period, Base Salary shall be increased, commencing on August 1 of the next
Fiscal Year (the Company's Fiscal Year being the 12-month period ending July 31
of each year), to the amount obtained by multiplying Base Salary by a fraction,
the numerator of which is the Consumer Price Index for the month of March of the
year in which such determination is being made and the denominator of which is
the Consumer Price Index for the Base Period. Notwithstanding the foregoing, in
no event shall Employee receive, for any Fiscal Year, an increase in Base Salary
of less than five (5%) percent over the Base Salary, as adjusted, (continued
hereafter to be referred to simply as "Base Salary") for the previous Fiscal
Year.
3.2 Incentive Compensation. For each Fiscal Year of the Company
(each a "Subject Fiscal Year") during the Employment Period (commencing with the
Company's Fiscal Year ending July 31, 2000) the Employee shall be paid, as
additional compensation for his services, a bonus (the "Bonus") based on the
increase in profitability of the Company. The Bonus shall be equal to five
percent (5%) of the excess of Pretax Income (hereinafter defined) for the
Subject Fiscal Year over Pretax Income for the Test Year (as hereinafter
defined) multiplied by a number (i) the numerator of which shall be the number
of days during Subject Fiscal Year that
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Employee is employed hereunder and (ii) the denominator of which shall be 365,
but shall, in no event, exceed 100% of Employee's Base Salary for such Subject
Fiscal Year. The Bonus shall be payable not later than the 15th day of the
fourth month following the Subject Fiscal Year for which the Bonus is payable.
"Test Year" shall mean the Company's Fiscal Year, commencing with the Company's
Fiscal Year ending July 31, 1999, in which the Company has recorded its highest
Pretax Income of any such Fiscal Years.
"Pretax Income" shall mean, for any Fiscal Year, the income of
the Company and its consolidated subsidiaries from continuing operations
determined in accordance with generally accepted accounting principles from time
to time in effect ("GAAP") before provisions for income taxes and Employee's
Bonus pursuant to this Section 3.2. Pretax Income shall be adjusted to exclude
gains or losses from the sale or distribution of assets not in the Company's
ordinary course of business and gains or losses from transactions accounted for
as extraordinary events in accordance with GAAP.
3.3 Stock Options. The Company agrees to cause the grant to Employee
as of the Effective Date, an option (the "Option") to purchase Fifty Thousand
(50,000) shares of Common Stock, par value $.10 per share of Cantel. The Option
will be granted under Cantel's 1997 Employee Stock Option Plan (the "Plan")
pursuant to a separate option agreement in the form annexed hereto as Exhibit A.
The Option shall have a five year term, a three-year vesting schedule
(commencing on the first anniversary of the Effective Date), and an option
exercise price per share
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equal to the fair market value of Cantel's Common Stock on the Effective Date.
3.4 Discretionary Compensation. The Employee shall also be entitled
to such additional increases in Base Salary, bonuses and stock options as shall
be determined from time to time by the Board of Directors of Cantel.
3.5 Life Insurance. Provided that Employee is insurable at rates
that are comparable to those obtainable on other persons of similar age and
position in good health (if Employee is classified in a higher risk category, he
may elect to pay the excess premium cost to obtain the coverage), during the
Employment Period the Company shall procure and maintain term life insurance on
the life of Employee in the face amount of $250,000. Employee shall be the owner
of such life insurance policy and shall have the absolute right to designate the
beneficiaries thereunder. The Company shall pay all premiums for such life
insurance. Employee agrees to submit to all medical examinations, supply all
information and execute all documents required by insurance companies in
connection with the issuance of such policy.
3.6 Use of Automobile. During the Employment Period, Employee shall
be entitled to the use of an automobile leased or owned by the Company in
connection with the Company's business. The make and model of the automobile
shall be reasonably satisfactory to Employee, provided that the Company's
monthly payments in respect thereof (exclusive of the expenses referred to in
the following sentence) shall not exceed $500. Employee shall be entitled to
receive reimbursement for reasonable out-of-pocket expenses, including, without
limitation, cost of gas, oil, insurance and other costs incurred by Employee in
operating and maintaining the
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automobile; provided, however, that Employee shall be responsible for keeping
appropriate records regarding the use of said automobile, as instructed by the
Company or its accountants.
3.7 Other Benefits. During the Employment Period, Employee shall be
entitled to participate in (i) the Company's 401-K benefit plan and (ii) the
medical health insurance plan and all other health, insurance and other benefit
plans applicable generally to executive officers of the Company on the same
basis as such officers.
During the Employment Period, Employee will be entitled to
paid vacation (4 weeks) and holidays consistent with the Company's policy
applicable to executives generally. All vacations shall be scheduled at the
mutual convenience of the Company and the Employee.
4. Termination of Employment. The provisions of Section 1 of this
Agreement notwithstanding, the Company may terminate this Agreement and
Employee's employment hereunder in the manner and for the causes hereinafter set
forth, in which event the Company shall be under no further obligation to
Employee other than as specifically provided herein:
A. If Employee is absent from work or otherwise substantially
unable to assume his normal duties for a period of sixty (60) successive days or
an aggregate of ninety (90) business days during any consecutive twelve-month
period during the Employment Period because of physical or mental disability,
accident, illness, or any other cause other than vacation or approved leave of
absence, the Company may thereupon, or any time thereafter while such absence or
disability still
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exists, terminate the employment of Employee hereunder upon ten (10) days'
written notice to Employee.
B. In the event of the death of Employee, this Agreement shall
immediately terminate on the date thereof.
C. If Employee materially breaches or violates any material
term of his employment hereunder, or commits any criminal act or an act of
dishonesty or moral turpitude, in the reasonable judgment of Cantel's Board of
Directors, then the Company may, in addition to other rights and remedies
available at law or equity, immediately terminate this Agreement upon written
notice to Employee with the date of such notice being the termination date and
such termination being deemed for "cause". In the event Employee's employment is
terminated pursuant to this subparagraph C, then in such event, Employee shall
be entitled only to Basic Compensation through the date of termination, and the
Company shall have no further obligation under Section 3 of this Agreement.
D. In the event Employee's employment shall be terminated by
reason of the provisions of subparagraph A or B of this Section 4, then in such
event, the Company shall continue to pay to Employee, if living, or other person
or persons as Employee may from time to time designate in writing as the
beneficiary of such payments, the Basic Compensation in effect at the time which
such death or disability occurred during the three-month period following such
death or disability.
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5. Disclosure of Confidential Information, Assignment of Inventions,
AND COVENANT NOT TO COMPETE.
5.1 Confidential Information. Employee acknowledges that the
Company possesses confidential information, know-how, customer lists,
purchasing, merchandising and selling techniques and strategies, and other
information used in its operations of which Employee will obtain knowledge, and
that the Company will suffer serious and irreparable damage and harm if this
confidential information were disclosed to any other party or if Employee used
this information to compete against the Company. Accordingly, Employee hereby
agrees that except as required by Employee's duties to the Company, Employee,
without the consent of the Company's Board of Directors, shall not at any time
during or after the Employment Period disclose or use any secret or confidential
information of the Company, including, without limitation, such business
opportunities, customer lists, trade secrets, formulas, techniques and methods
of which Employee shall become informed during his employment, whether learned
by him as an employee of the Company, as a member of its Board of Directors or
otherwise, and whether or not developed by Employee, unless such information
shall be or becomes public knowledge other than as a result of Employee's direct
or indirect disclosure of the same.
5.2 Patent and Related Matters.
5.2.1 Employee will promptly disclose in writing to
the Company complete information concerning each and every invention,
discovery, improvement and idea (whether or not shown or described in writing
or reduced to
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practice), and device, design, apparatus, process, and work of authorship,
whether or not patentable, copyrightable or registerable, which is made,
developed, perfected, devised, conceived or first reduced to practice by
Employee, either solely or in collaboration with others, during the Employment
Period, whether or not during regular working hours (hereinafter collectively
referred to as the "Inventions"). Employee, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of the Inventions are
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Employee's right, title and interest in and to any and all of the
Inventions.
5.2.2 Limitation. It is further agreed and
Employee is hereby notified that the above agreement to assign the Inventions
to the Company does not apply to an Invention for which no equipment,
supplies, facility or confidential information of the Company was used and
which was developed entirely on Employee's own time, and
(i) which does not relate (a) directly to
the business of the Company or (b) to the Company's actual or demonstrably
anticipated research or development, or
(ii) which does not result from any work
performed
by Employee for the Company.
5.2.3 Assistance. Upon request and without further
compensation therefor, but at no expense to Employee, and whether during the
Employment Period or thereafter, Employee will do all lawful acts, including,
but not
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limited to, the execution of documents and instruments and the giving of
testimony, that in the opinion of the Company, its successors and assigns, may
be necessary or desirable in obtaining, sustaining, reissuing, extending or
enforcing United States and foreign copyrights and Letters Patent, including,
but not limited to, design patents, on any and all of the Inventions, and for
perfecting, affirming and recording the Company's complete ownership and title
thereto, and to cooperate otherwise in all proceedings and matters relating
thereto.
5.2.4 Records. Employee will keep complete, accurate
and authentic accounts, notes, data and records of all the Inventions in the
manner and form requested by the Company. Such accounts, notes, data and records
shall be the property of the Company, and upon its request, Employee will
promptly surrender the same to it.
Upon the termination of the Employment Period, Employee
agrees to deliver promptly to the Company all records, manuals, books, blank
forms, documents, letters, memoranda, notes, notebooks, reports, data, tables,
accounts, calculations and copies thereof, which are the property of the Company
or which relate in any way to the business, products, practices or techniques of
the Company, and all other property, trade secrets and confidential information
of the Company, including, but not limited to, all documents which in whole or
in part contain any trade secrets or confidential information of the Company,
which in any of these cases are in his possession or under his control.
5.3 Non-Compete. Employee agrees that for a
period of
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one year following the termination of Employee's employment hereunder (the
"Non-Competition Period"), except as a result of the breach by the Company of
any material term or condition hereof, Employee will not, directly or
indirectly, alone or with others, individually or through or by a corporate or
other business entity in which he may be interested as a partner, shareholder,
joint venturer, officer, director, employee or otherwise, own, manage, control,
participate in, lend his name to, or render services to or for any business
within the continental United States which is competitive with that of the
Company or any of its affiliates, provided, however, that the foregoing shall
not be deemed to prevent the ownership by Employee of up to five percent of any
class of securities of any corporation which is regularly traded on any stock
exchange or over-the-counter market. For the purpose of this Agreement, a
business activity competitive with the business of the Company or any of its
affiliates shall include only the design, manufacture, marketing, sale, or
distribution of (i) endoscopes, (ii) endoscope disinfection or sterilization
equipment or supplies, (iii) medical waste disposal systems or (iv) infection
control equipment, products, supplies or systems (collectively "Products") which
are the same as or similar to or compete with, or have a usage allied to
Products being developed, marketed, sold or distributed by the Company or any of
its affiliates at any time during the last twelve months of Employee's
employment by the Company.
5.4 Non-interference. Employee further agrees
that during the Non-Competition Period he will not (i) induce or attempt to
induce any other employee of the Company or any of its affiliates to leave
the employ of the Company
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or affiliate, or in any way interfere with the relationship between the Company
(or any of its affiliates) and any other employee, or (ii) induce or attempt to
induce any customer, supplier, franchisee, licensee, distributor or other
business relation of the Company or any of its affiliates to cease doing
business with the Company or affiliate, or in any way interfere with the
relationship between any customer, franchisee or other business relation and the
Company and any of its affiliates without prior written consent of the Board of
Directors of Cantel.
5.5 Enforcement. If, at the time of enforcement
of any provisions of this Section, a court of competent jurisdiction holds
that the restrictions stated herein are unreasonable under the circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances will be substituted for
the stated period, scope or area. Employee agrees that the covenants made in
this Section shall be construed as an agreement independent of any other
provision of this Agreement, and shall survive the termination of this
Agreement.
6. Reimbursement of Expenses. The Company shall further pay
directly, or reimburse Employee, for all other reasonable and necessary expenses
and disbursements incurred by him for and on behalf of the Company in the
performance of his duties during the Employment Period upon submission of
vouchers or other evidence thereof in accordance with the Company's usual
policies of expense reimbursement.
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7. Miscellaneous Provisions.
7.1 Section headings are for convenience only and shall not be
deemed to govern, limit, modify or supersede the provisions of this Agreement.
7.2 This Agreement is entered into in the State of Minnesota
and shall be governed pursuant to the laws of the State of Minnesota. If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable, the remaining provisions hereof shall
continue to be fully effective.
7.3 This Agreement contains the entire agreement of the
parties regarding this subject matter. There are no contemporaneous oral
agreements, and all prior understandings, agreements, negotiations and
representations are merged herein.
7.4 This Agreement may be modified only by means of a writing
signed by the party to be charged with such modification.
7.5 Notices or other communications required or permitted to
be given hereunder shall be in writing and shall be deemed duly given upon
receipt by the party to whom sent at the respective addresses set forth below or
to such other address as any party shall hereafter designate to the other in
writing delivered in accordance herewith:
If to MediVators:
MediVators, Inc.
0000 Xxxx Xxx Xxxxxx
Xxxxx 00
Xxxxx, Xxxxxxxxx 00000
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With a copy to:
Cantel Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
If to Employee:
Xxx X. Xxxxxx
00000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
7.6 This Agreement shall inure to the benefit of, and shall be
binding upon, the Company, its successors and assigns, including, without
limitation, any entity that may acquire all or substantially all of the
Company's assets and business or into which the Company may be consolidated or
merged. This Agreement may not be assigned by Employee.
7.7 This Agreement may be executed in separate counterparts
and may be delivered by facsimile, each of which shall constitute the original
hereof.
IN WITNESS WHEREOF, the parties have set their hands as of the date
first above written.
MEDIVATORS, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, Vice President
/s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx
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