EXHIBIT 99.2
AGREEMENT
PrimeSource Healthcare, Inc. (the "Company") and Xxxxxxx X. Xxxxxx (the
"Employee"), in order to memorialize the terms and conditions of the termination
of the employment of the Employee with the Company, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, agree as follows:
1. Termination. The Company and the Employee are parties to an amended
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and restated Employment Agreement dated as of July 1, 1999, as amended by
memorandum dated January 24, 2001 (collectively the "Employment Agreement"). The
Employee and the Company agree that the employment of the Employee by the
Company is terminated as of the date hereof (the "Termination Date").
2. Severance and Other. (a) The Company shall pay the Employee
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severance of one (1) year's current annual salary of $225,000, payable
semi-monthly, but in a monthly amount equal to $12,500 for the first twelve (12)
months following the Termination Date, with the $75,000 balance (the "Deferred
Amount") payable in equal semi-monthly amounts of $3,125 for the second twelve
(12) months following the Termination Date. Payments under this Section 2(a)
shall begin on the first pay period following the date the Release attached
hereto as Appendix A (the "Release") becomes effective (the "Release Effective
Date"); provided, that the first such payment shall include all amounts accrued
under this Section 2(a) from the Termination Date through such first payment
date.
(b) The Company shall reimburse the Employee for all reasonable and
necessary out-of-pocket expenses incurred by him through the Termination Date on
behalf of the Company in the performance of his duties and in accordance with
the Company's policies established from time to time, subject to the prior
authorization thereof or subsequent presentment of appropriate receipts or
vouchers therefor.
(c) During the one (1) year period following the Termination Date, the
Company shall continue to pay the Employee a monthly automobile allowance of
$600.00 on the same dates as it is currently paid. Payments under this Section
2(c) shall begin on the first pay period following the date the Release
Effective Date; provided, that the first such payment shall include all amounts
accrued under this Section 2(c) from the Termination Date through such first
payment date.
(d) During the one (1) year period following the Termination Date, the
Employee and his family shall continue to receive the same health, dental and
other benefits currently received, at the Company's cost and expense. The
Employee agrees that the Employee's termination of employment on the Termination
Date shall be deemed a "qualifying event" for purposes of Section 4980B(f)(3) of
the Internal Revenue Code of 1986, as amended.
(e) On the Termination Date, the Company shall change the beneficiary
as directed by the Employee and assign to the Employee, the Employee's life
insurance policy with Northwestern Mutual Life (Policy No. 14-512-725).
(f) On the Termination Date, the Company shall pay the Employee his
accrued vacation and sick time. As of October 31, 2001, accrued vacation and
sick time totaled 157.0 and 140.55 hours, respectively.
(g) Upon presentation of appropriate bills for legal services, within
five (5) business days of the Release Effective Date, the Company shall pay the
Employee's legal counsel's fees and expenses, not to exceed $3,750.
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(h) The Company shall pay to the Employee a bonus equal to one percent
(1%) of the first $4.5 million of funds raised by the Company from the closing
of equity (or equity-like) financing during the period beginning on the
Termination Date and ending on June 30, 2002. Such bonus shall be paid to the
Employee within five (5) business days of the Company's receipt of funds from
any such financing.
(i) The Deferred Amount shall become immediately due and payable upon
(i) a Change of Control as defined below, (ii) the Company's raising additional
equity financing in an amount of $5,000,000 or more in a transaction or series
of transactions, or (iii) if the Company fails to pay, when due, any portion of
the Deferred Amount or any portion of the other amounts payable under this
Section 2. The amounts payable under this Section 2 are payable without
counterclaim, setoff or recoupment. As used herein, a "Change of Control" shall
be deemed to have occurred upon (x) the consummation of a tender offer for or
purchase of more than fifty percent (50%) of the Company's Capital Stock by a
third party, excluding the initial public offering by the Company of any class
of its Common Stock or (y) a merger, consolidation or sale of all or
substantially all of the assets of the Company such that the stockholders of the
Company immediately prior to the consummation of such transaction possess less
than fifty percent (50%) of the voting securities of the surviving entity
immediately after the transaction.
(j) The Employee may retain, without payment to the Company, certain
office equipment and supplies utilized by the Employee in performing his duties
with the Company. Such equipment and supplies shall be set forth on Appendix B.
3. Board Resignation; Information Rights. The Employee shall resign as
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a director of the Company on the Termination Date. The Company shall give, or
cause to be given, to the Employee all notices and written information given to
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directors of the Company (including, without limitation, monthly, quarterly and
year-end financial statements and bank compliance certificates) until such time
as the Employee notifies the Company that he no longer is the beneficial owner
of any equity securities of the Company. Such information shall be deemed to be
Proprietary Information, as defined in Section 7 of this Agreement, and subject
to the provisions of such Section. Employee agrees not to use such information
to trade in the Company's securities unless and until such information is
generally available to the public.
4. Stock Options. The Company shall permit the Employee to utilize a
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cashless exercise of his incentive stock options that are vested and exercisable
on the Termination Date. The expiration of the exercise period for such
incentive stock options shall be extended to the date that is sixty (60) days
after the Company files an S-8 registration statement and such registration
statement becomes effective. The Company acknowledges that the incentive stock
options to purchase 55,813 shares of Company common stock granted to the
Employee on February 6, 1998 are fully vested.
5. Stock Documents. The Company consents to the amendment of the
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Amended and Restated Co-Sale Agreement, dated June 28, 2001, by and among
PrimeSource Healthcare, Inc. and the persons listed as Stockholders therein and
the Amended and Restated Registration Rights Agreement, dated June 28, 2001, by
and among PrimeSource Healthcare, Inc. and the persons listed as Stockholders
therein to delete the Employee as a party thereto, and the Company agrees to
obtain and deliver to the Employee the written consent of the requisite parties
thereto to such amendment within fifteen (15) days of the Termination Date.
6. Employment Inquiries. Following the Termination Date, if the Company
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receives an inquiry as to the former employment of the Employee, the Company
shall only release the Employee's name and title, beginning and end date of
employment, and confirm a salary if the inquiring party supplies a salary figure
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and the Employee consents in writing to release of such salary information.
Following the Termination Date, the Company will maintain and provide access to
the Employee's current voicemail and e-mail for a period of 60 days.
7. Proprietary Information Obligations. During the Employee's
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employment with the Company, Employee had access to and became acquainted with
the Company's confidential and proprietary information, including, but not
limited to, information or plans regarding the Company's customer relationships,
personnel, or sales, marketing, and financial operations and methods; trade
secrets; formulas; devices; secret inventions, processes; and other compilations
of information, records, and specifications (collectively, "Proprietary
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Information"). Employee shall not disclose any of the Company's Proprietary
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Information directly or indirectly, or use it in any way, except as authorized
in writing by the Company. All files, records, documents, computer-recorded
information, drawings, specifications, equipment and similar items relating to
the business of the Company or its subsidiaries, whether prepared by Employee or
otherwise coming into his possession, shall remain the exclusive property of the
Company, as the case may be, and shall not be removed from the premises of the
Company or its subsidiaries under any circumstances whatsoever without the prior
written consent of the Company, and if removed shall be immediately returned to
the Company; provided, however, that Employee may retain any documents that were
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personally owned or reasonably related to his interest as a stockholder.
Employee agrees not to use the information contained in such retained documents
for any business purpose. Notwithstanding the foregoing, Proprietary Information
shall not include (a) information which is or becomes generally public knowledge
or public except through disclosure by Employee in violation of this Agreement
and (b) information that may be required to be disclosed by applicable law. In
the event of a breach or threatened breach of this Section 7, the Employee
agrees that the Company shall be entitled to apply for injunctive relief in a
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court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Employee acknowledging that damages would be inadequate and
insufficient.
8. Release. In consideration for the severance payments and other
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benefits provided to the Employee pursuant to this Agreement, Employee shall
execute the Release. Employee's failure to execute the Release shall be deemed a
waiver of such severance payments and other benefits. The Release is hereby
incorporated by reference and is considered a part of this Agreement.
9. Amendment of Agreement. This Agreement may not be modified or
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amended except by an instrument in writing signed by the parties hereto.
10. Severability. If, for any reason, any provision of this Agreement
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is held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law be continued in full force and effect.
11. Headings. The headings of sections herein are included solely for
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convenience of reference and shall not constitute part of this Agreement or
effect the meaning or interpretation of any of the provisions of this Agreement.
12. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Arizona, without giving effect to
conflicts of laws principles.
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13. Benefit; Assignment. This Agreement inures to the benefit of the
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respective successors, assigns, heirs and personal representatives of the
parties. Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent of the
other parties hereto and any attempt to do so will be void.
14. Cost of Litigation. In any action, suit or proceeding between any
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of the parties to this Agreement to enforce this Agreement or which otherwise
arises from this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and expenses in connection therewith.
15. Entire Agreement. This Agreement supersedes all prior discussions
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and agreements among the parties hereto with respect to the subject matter
hereof. This Agreement supercedes the Employment Agreement in its entirety as of
the Termination Date; provided, however, that if the Release is revoked in
accordance with its terms, this Agreement shall not supercede the Employment
Agreement, and the Employment Agreement shall continue in effect in accordance
with its terms.
16. Counterparts. This Agreement may be executed by the parties hereto
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in separate counterparts which together shall constitute one and the same
instrument.
17. Construction. This Agreement has been drafted and/or negotiated by
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the respective counsel for the parties, and it shall not be construed against
any party by reason of the party who drafted it.
18. Effective Date. This Agreement shall become effective upon the
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Termination Date, but shall be of no force or effect if the Release is revoked
in accordance with its terms.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has executed this
Agreement, all as of November 27, 2001.
PRIMESOURCE HEALTHCARE, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
Chief Restructuring Officer
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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