Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
May, 8, 2002, by and between Xxxxxx X. Xxxxxx, an individual resident of the
State of Minnesota ("Employee"), and Horizon Medical Products, Inc., a Georgia
corporation ("Employer");
WITNESSETH:
WHEREAS, Employer desires to employ Employee and Employee desires to
be employed by Employer, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
SECTION 1 EMPLOYMENT.
Subject to the terms hereof, the Employer hereby employs Employee, and
Employee hereby accepts such employment. Employee will serve as Chief Operating
Officer of Employer and will be responsible for the operating plans, policies,
and profitability of the total company, subject to the direction of the Chief
Executive Officer, the Board of Directors, or the Executive Committee, with
specific duties to include those matters set forth in Exhibit "A" attached
hereto. Employee agrees to devote his full business time and best efforts to
the performance of such duties and other duties that the Chief Executive
Officer or the Board of Directors of Employer (the "Board of Directors") or the
Executive Committee may assign to Employee from time to time, and will report
to the Chief Executive Officer.
SECTION 2 TERM OF EMPLOYMENT.
The term of Employee's employment hereunder (the "Term") shall be from
May 8, 2002 (the "Effective Date") until termination upon the occurrence of any
of the following events, provided that the Term shall expire on December 31,
2002 if not previously terminated:
(A) The death or total disability of Employee (total
disability meaning the failure to fully perform his normal required services
hereunder for a period of three (3) consecutive months during the Term hereof,
as determined by the Board of Directors, by reason of mental or physical
disability);
(B) The termination by Employer of Employee's employment
hereunder, upon prior written notice to Employee, for "good cause". For
purposes of this Agreement, "good cause" for termination of Employee's
employment shall exist (i) if Employee is convicted of, pleads guilty to, or
confesses to any felony or any act of fraud, misappropriation, or embezzlement,
(ii) if Employee has engaged in a dishonest act to the material damage or
prejudice of Employer or a subsidiary of Employer, or in misconduct or unlawful
or improper activities
materially damaging to the business of Employer or a subsidiary of Employer, or
(iii) if Employee fails to comply with the terms of this Agreement, and, within
thirty (30) days after written notice from Employer of such failure, Employee
has not corrected such failure or, having once received such notice of failure
and having so corrected such failure, Employee at any time thereafter again so
fails, provided, that Employee will be given the opportunity to explain his
position in the matter at a meeting of the Board of Directors of Employer prior
to any termination under this clause (iii), or (iv) if Employee wilfully
neglects or breaches his duties or engages in intentional misconduct in
discharging his duties as an officer and employee of Employer;
(C) The termination of this Agreement by Employee upon
at least ninety (90) days prior written notice;
(D) The termination of this Agreement by Employer
without cause upon at least thirty (30) days prior written notice; or
(E) The termination of this Agreement by mutual written
agreement of Employer and Employee.
XXXXXXX 0X XXXXXXXXX XX XXXX OF EMPLOYMENT.
Employer and Employee will commence discussions and negotiations no
later than September 30, 2002 for an extension of the Term hereunder on the
following terms and will conclude negotiations no later than November 1, 2002:
(A) A one year term for the extension.
(B) Employee would be both Chief Operating Officer and
President of Employer during the renewal term;
(C) Base salary during the renewal term would be
$225,000;
(D) Under such renewal, options under the Plan (as
defined below) would vest as provided in Section 4 below; and
(E) Employee would be entitled to receive a bonus for
the one year renewal term of (i) seventy-five percent (75%) of the base salary,
during the renewal term if the MBOs established for Employee by the Chief
Executive Officer and the Executive Committee of the Board of Directors for
fiscal 2003 are satisfied and (ii) an additional twenty-five percent (25%) of
base salary if such MBOs are exceeded by five percent (5%) or more for fiscal
2003, payable when the financial statements for 2003 are finalized and approved
by the Audit Committee of the Board of Directors.
-2-
SECTION 3 COMPENSATION.
3.1 TERM OF EMPLOYMENT. Employer will provide Employee with the
following salary, expense reimbursement, and additional employee benefits
during the term of employment hereunder:
(A) SALARY. Employee will be paid a salary (the
"Salary") of no less than Two Hundred Thousand
Dollars ($200,000.00) per annum, less deductions and
withholdings required by applicable law, prorated
during the Term. The Salary shall be paid to
Employee in equal monthly installments (or on such
more frequent basis as other executives of Employer
are compensated).
(B) BONUS. Employee will receive a bonus of Sixty-Five
Thousand Dollars ($65,000.00) if the MBOs
established for Employee by the Chief Executive
Officer and the Executive Committee of the Board of
Directors for the third and fourth quarters of 2002
are satisfied. Such bonus will be payable when the
financial statements for the fourth quarter of 2002
are finalized and approved by the Audit Committee of
the Board of Directors.
(C) CAR ALLOWANCE. Employer shall provide Employee with
a monthly automobile allowance of Nine Hundred
Dollars ($900.00) with no reimbursement for any
rental car expense.
(D) VACATION. Employee shall receive four (4) weeks
vacation time per calendar year during the term of
this Agreement commencing with the year 2002 with
partial calendar years prorated. Any unused vacation
days in any calendar year may not be carried over to
subsequent years.
(E) EXPENSES. Employer shall reimburse Employee for all
reasonable and necessary expenses incurred by
Employee at the request of and on behalf of
Employer. Reimbursement requests will comply with
the Employer's procedures and policies and must be
approved by the Chief Executive Officer.
(F) BENEFIT PLANS. Employee may participate in such
medical, dental, disability, hospitalization, life
insurance, and other benefit plans (such as pension
and profit sharing plans) as
-3-
Employer maintains from time to time for the benefit
of its senior managers (excluding Xxxxxxxx X. Xxxx
and Xxxxxxx X. Xxxxxxxx, Xx.), on the terms and
subject to the conditions set forth in such plans,
including without limitation Employer's 401(k) Plan.
(G) COMMUTING EXPENSES AND APARTMENT. Employer shall
provide Employee with a monthly commute expense
allowance of One Thousand Dollars ($1,000.00) for
all expenses incurred by Employee in commuting from
and to his home in Minnesota. Employer will make
available to Employee its apartment in Manchester
for use by Employee prior to his permanent move to
Georgia.
3.2 EFFECT OF TERMINATION. Except as hereinafter provided, upon
the termination of the employment of Employee hereunder for any reason,
Employee shall be entitled to all compensation and benefits earned or accrued
under Section 3.1 as of the effective date of Termination (the "Termination
Date"), but from and after the Termination Date no additional compensation or
benefits shall be earned by Employee hereunder. If Employee's employment
hereunder is terminated by Employer without good cause after June 30, 2002,
Employee shall be deemed to have earned any bonus payable with respect to the
quarter in which the Termination Date occurs on a prorated basis (with the
bonus calculated as of the end of the quarter in which the Termination Date
occurs and with proration through the Termination Date).
If Employee's employment hereunder is terminated by Employer pursuant
to Section 2(d) hereof, then, in addition to any other amount payable
hereunder, Employer shall continue to pay Employee his normal Salary pursuant
to Section 3.1(a) during the Termination Period (as defined below) in periodic
payments (on the same basis as if Employee continued to serve as an employee
hereunder for such period) and Employee shall continue to be eligible to
receive his automobile allowance and to have Employer pay his individual
premiums for his COBRA health insurance benefits during the applicable
Termination Period without any additional expense to Employee. The "Termination
Period" shall mean a period that commences on the Termination Date and
continues thereafter through December 31, 2002.
SECTION 4 OPTIONS UNDER INCENTIVE STOCK PLAN.
The Executive Committee of the Board of Directors of the Employer will
grant to Employee options to purchase 225,000 shares of common stock of
Employer under and subject to Employer's 1998 Stock Incentive Plan (the
"Plan"), and Employer will use its best efforts to finalize such grant on
Employee's initial day of employment hereunder; provided, however, that such
grant shall be conditioned upon the approval of an increase in the number of
shares authorized under the Plan from 1,400,000 to 6,000,000 shares by the
shareholders of Employer at the 2002 annual meeting of shareholders. Under the
Plan, the option price will be the closing
-4-
stock price on the day the options are granted by the Executive Committee. The
options will vest on the following schedule under the Plan: 100,000 shares
shall vest and become exercisable under and subject to the Plan on December 31,
2002 if Employee is an employee of Employer on such date. In the event that the
Term is renewed pursuant to Section 2A above, then the remaining option for
150,000 shares shall vest and become exercisable under and subject to the Plan
in increments as follows: one-third (1/3) on December 31, 2003 if Employee is an
employee of Employer on such date, one-third (1/3) on December 31, 2004 if
Employee is an employee of Employer on such date, and the remaining one-third
(1/3) on December 31, 2005 if Employee is an employee of Employer on such date.
SECTION 5 NON-COMPETE COVENANTS.
During the twelve (12) month period after Employee's employment with
Employer has ended (for whatever reason), Employee shall not, within the United
States, engage in manufacturing, selling, or distributing medical products that
compete with medical products sold by Employer during the last six (6) months
of Employee's employment with Employer, on behalf of any manufacturer or
distributor whose products compete with Employer's products. During the
eighteen (18) month period after Employee's employment with Employer has ended
(for whatever reason), Employee shall not, on his own behalf or on behalf of
others, hire or solicit for employment any person who at the time of such
hiring or solicitation is an employee of Employer.
SECTION 6 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
6.1 TRADE SECRETS. During the term of the Employee's employment
by the Employer and after the termination of such employment, whether such
termination is by the Employee or the Employer, the Employee shall not use or
disclose, or permit any unauthorized person access to, any Trade Secrets
belonging to the Employer or any third party whose Trade Secrets are in the
possession of the Employer.
6.2 CONFIDENTIAL INFORMATION. During the term of the Employee's
employment by the Employer and for a period of two (2) years after termination
of such employment, whether such termination is by the Employee or by the
Employer, the Employee shall not use or disclose, or permit any unauthorized
person access to, any Confidential Information belonging to the Employer or any
third party whose Confidential Information is in the possession of the
Employer.
6.3 DELIVERY OF INFORMATION. Upon request of the Employer and in
any event upon the termination of employment with the Employer, the Employee
shall deliver to the Employer all memoranda, notes, records, tapes,
documentation, disks, manuals, files, or other documents, and all copies
thereof, concerning or containing Confidential Information or Trade Secrets
that are in the Employee's possession, whether made or compiled by the Employee
or furnished to the Employee by the Employer.
-5-
6.4 DEFINITION OF TRADE SECRETS. For purposes of this Agreement,
"Trade Secrets" shall refer to the trade secrets of the Employer as that term
is defined in the Official Code of Georgia Annotated, ss.10-1-761, as amended
from time to time. Trade Secrets also include any information described herein
which the Employer obtains from a third party, which Employer or such third
party treats as proprietary or designates as Trade Secrets, whether or not
owned or developed by the Employer.
6.5 DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" shall mean any data or information, other
than Trade Secrets, that is of value to the Employer and is not generally known
to competitors of the Employer and that is treated by the Employer as
confidential (whether or not such material or information is marked
"confidential"). To the extent consistent with the foregoing and to the extent
not Trade Secrets, Confidential Information includes, but is not limited to,
lists of any information about the Employer's executives and employees,
marketing techniques, price lists, pricing policies, business methods,
manufacturing processes and records, regulatory files and information, supplier
and vendor information and contracts, and financial information. Confidential
Information also includes any information described in this paragraph which the
Employer obtains from a third party, which the Employer or the third party
treats as proprietary or designates as Confidential Information, whether or not
owned or developed by the Employer.
6.6 DEFINITION OF EMPLOYER. For purposes of this Section 6, the
term Employer shall include Horizon and its subsidiaries.
6.7 INVENTIONS. Any invention developed by Employee during the
course of his employment while working at Employer shall be the sole property
of Employer, and Employee agrees to execute an appropriate assignment
instrument upon request by Employer transferring all rights in any such
invention to Employer.
SECTION 7 MISCELLANEOUS.
7.1 SEVERABILITY. The covenants in this covenants independent of
one another and as obligations distinct from any other contract between
Employee and Employer. Any claim that Employee may have against Employer shall
not constitute a defense to enforcement by Employer of this Agreement. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such unvalid or unenforceable provision were
omitted.
7.2 NOTICES.
EMPLOYER: Horizon Medical Products, Inc.
ATTN: CHIEF EXECUTIVE OFFICER
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
-6-
EMPLOYEE: Xxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
7.3 BINDING EFFECT. This Agreement inures to the benefit of, and
is binding upon, Employer and its successors and assigns, and Employee,
together with Employee's executor, administrator, personal representative,
heirs, and legatees.
7.4 ENTIRE AGREEMENT. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the terms
thereof, notwithstanding any representations, statements, or agreements to the
contrary heretofore made. This Agreement supersedes and terminates all prior
employment and compensation agreements, arrangements, and understandings
between or among Employer and Employee. This Agreement may be modified only by
a written instrument signed by all of the parties hereto.
7.5 GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed, and governed by and in
accordance with, the laws of the State of Georgia. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority or by any
board of arbitrators by reason of such party or its counsel having or being
deemed to have structured or drafted such provision.
7.6 HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
7.7 SPECIFIC PERFORMANCE. Each party hereto hereby agrees that
any remedy at law for any breach of the provisions contained in Section 5 or 6
of this Agreement shall be inadequate and that the other parties hereto shall
be entitled to specific performance and any other appropriate injunctive relief
in addition to any other remedy such party might have under this Agreement or
at law or in equity.
7.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
-7-
7.9 DISPARAGEMENT. During the term of this Agreement and
thereafter, Employee shall not disparage Employer or its
products, officers, Directors, or employees, and Employer shall not disparage
Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxxxx X. Xxxx
----------------------------------------
Xxxxxxxx X. Xxxx,
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
-8-
