EXHIBIT 10(n)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 1st day of November, 2001, by and between
MINNTECH CORPORATION, a Minnesota corporation (the "Company"), and XXX X. XXXXXX
(the "Employee").
INTRODUCTION
Employee is currently employed as President and Chief Executive Officer of
the Company and MediVators, Inc. ("MediVators"), a wholly-owned subsidiary of
Cantel Medical Corp. ("Cantel"). Cantel has recently acquired the Company, which
is now a wholly-owned subsidiary of Cantel. Since the acquisition, Employee has
served as President of both the Company and MediVators. Employee and the Company
desire to enter into an employment agreement and to set forth herein the terms
and conditions of Employee's employment by the Company. Such agreement will
replace and supersede Employee's employment agreement with MediVators.
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 November 1, 2001 (the "Effective
Date") and ending, unless sooner terminated in accordance with the provisions of
Section 4 hereof, on October 31, 2004 (the "Employment Period"). As used in this
Agreement, the term "Contract Year" shall refer to each twelve-month period
during the Employment Period ending October 31. Employee and MediVators (by its
signature below) agree that the Employment Agreement between MediVators and
Employee dated May 19, 1999 is cancelled and superseded by this Agreement as of
the Effective Date without any further liability or obligation thereunder (other
than Section 5.1 thereof, which shall survive).
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.
Employee will also continue to serve as President and Chief Executive Officer of
MediVators without additional compensation. 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 the Company.
3. COMPENSATION.
3.1 BASE SALARY. In respect of services to be performed by Employee
during the Employment Period, the Company agrees to pay Employee a base salary
("Base Salary") at the rate of $250,000 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
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 July 31, 2001
(the "Base Period"). If the Consumer Price Index for the month of July in any
year, commencing in 2002, is greater than the Consumer Price Index for the Base
Period, then the Base Salary shall be increased, commencing on November 1 of the
next Contract 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
July of the
2
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 Contract Year, an increase in Base
Salary of less than five (5%) percent over the Base Salary, as adjusted for the
previous Contract Year.
3.2 INCENTIVE COMPENSATION. For each Fiscal Year of the Company
during the Employment Period, the Employee shall be paid, as additional
compensation for his services, a bonus (the "Bonus") based on the combined
operating income of the Company and MediVators as follows:
3.2.1 The Bonus for the Fiscal Year ending July 31, 2002
shall be equal to five percent (5%) of the excess of the Combined EBIT
(hereinafter defined) for such Fiscal Year over $8,500,000.
3.2.2 The Bonus for the Fiscal Year ending July 31, 2003
shall be equal to five percent (5%) of the excess of the Combined EBIT for such
Fiscal Year over the sum of (a) the greater of (x) $7,336,000 and (y) the
Company's EBIT for the 327 day period ending July 31, 2002 multiplied by 1.1162
(365/327) (such product referred to herein as "2002 Minntech Annualized EBIT")
PLUS (b) the greater of (x) $1,927,000 and (y) MediVators EBIT for the Fiscal
Year ending July 31, 2002 ("2002 MediVators EBIT").
3.2.3 The Bonus for the Fiscal Year ending July 31, 2004
shall be equal to five percent (5%) of the excess of the Combined EBIT for such
Fiscal Year over the sum of (a) the greatest of (x) $7,336,000, (y) 2002
Minntech Annualized EBIT, and (x) the Company's EBIT for the Fiscal Year ending
July 31, 2003 PLUS (b) the greater of (x) $1,927,000, (y) 2002 MediVators EBIT
or (z) MediVators EBIT for the Fiscal Year ending July 31, 2003.
3.2.4 For the period commencing August 1, 2004 and ending
October 31, 2004, the Board of Directors of the Company shall determine the
amount of the Bonus in its sole discretion based on Employee's performance and
such other factors that the Board deems appropriate.
3
3.2.5 "EBIT" of a corporation for any Fiscal Year shall mean
operating income of the corporation and its consolidated subsidiaries for such
Fiscal Year from continuing operations, determined in accordance with generally
accepted accounting principles from time to time in effect, before provision for
interest (income) expense, income taxes, intercompany management charges and
provision for Employee's Bonus pursuant to this Section 3.2.
3.2.6 "Combined EBIT" for any Fiscal Year shall mean the
sum of the Company's EBIT and MediVators EBIT for such Fiscal Year.
3.2.7 Notwithstanding anything in this Section 3.2 to the
contrary, in the event Employee's employment with the Company is terminated
prior to the end of a Fiscal Year, the Bonus for such Fiscal Year shall be equal
to the Bonus determined pursuant to Section 3.2.1, 3.2.2 or 3.2.3, whichever is
applicable, multiplied by a fraction (i) the numerator of which is the number of
days during such Fiscal Year that Employee is employed hereunder and (ii) the
denominator of which shall be 365.
3.2.8 The Bonus shall be payable by November 15th following
the Fiscal Year for which the Bonus is payable.
3.3 DISCRETIONARY COMPENSATION. Employee shall also be entitled to
such additional increases in Base Salary, bonuses and stock options as may be
determined from time to time by the Compensation Committee of the Board of
Directors of Cantel.
4
3.4 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.
3.5 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 $700. In lieu of the foregoing, the
Company may pay Employee an automobile allowance of $700 a month. 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 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.
3.6 OTHER BENEFITS.
3.6.1 During the Employment Period, Employee shall be
entitled to participate, at Company expense (subject to applicable employee
contribution requirements imposed by the Company from time to time on its
employees generally), in 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. In addition,
Employee shall be entitled to participate in the
5
Company's 401(k) benefit plan.
3.6.2 During the Employment Period, Employee will be
entitled to paid vacation (four 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 Employee.
3.6.3 The Company will reimburse Employee for reasonable
out-of-pocket expenses incurred in furtherance of the business of the Company,
including travel, entertainment and similar items, upon the presentation of
appropriate receipts or vouchers therefor, consistent with the Company's policy
applicable to executives generally.
4. TERMINATION OF EMPLOYMENT. The provisions of Section 1 of this
Agreement notwithstanding, this Agreement and Employee's employment hereunder
may be terminated 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:
4.1 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 at any time thereafter while such absence
or disability still exists, terminate the employment of Employee hereunder upon
ten (10) days' written notice to Employee.
4.2 In the event of the death of Employee, this Agreement shall
immediately terminate on the date thereof.
4.3 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."
6
4.4 Employee may terminate his employment under this Agreement upon
not less than thirty (30) days' written notice to the Company if the Company,
without Employee's consent, undergoes a "Change in Control" (as defined below).
"Change in Control" shall mean (1) the acquisition of beneficial ownership,
direct or indirect, of securities of the Company by any person (as that term is
defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than Employee or a person approved by Employee, which when
combined with all other securities of the Company beneficially owned, directly
or indirectly, by that person, equals or exceeds 50% of the combined voting
power of the Company's then outstanding securities or (2) at any time after the
Effective Date, a majority of the Board of Directors is composed of persons who
are not "Continuing Directors" as hereinafter defined. "Continuing Directors" as
used herein shall mean (i) the directors of the Company at the close of business
on the Effective Date, and (ii) any person who was or is elected (A) to succeed
a Continuing Director or (B) to become a director as a result of an increase in
the size of the board, recommended, in each case, by a majority of the
Continuing Directors then on the Board. Any Termination Notice given by Employee
hereunder must be given within ninety (90) days following the occurrence of the
event giving rise to such termination.
4.5 In the event Employee's employment shall be terminated by reason
of the provisions of Section 4.1 or 4.2, 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.
4.6 Upon termination of Employee's employment under Section 4.3, the
Company shall have no further obligation under this Agreement to make any
payments to Employee or to bestow any benefits on Employee after the termination
date, other than payments and benefits accrued and due and payable to Employee
prior to the termination date.
4.7 Upon termination of Employee's employment by Employee under
Section 4.4,
7
then in addition to payments and benefits accrued and due and payable to
Employee prior to the termination date, the Company shall pay to Employee in a
lump sum, within ten (10) days following the termination date, an amount equal
to one hundred fifty percent (150%) of the Base Salary and Incentive
Compensation paid or accrued by the Company to Employee with respect to the most
recently completed Contract Year.
5. DISCLOSURE OF CONFIDENTIAL INFORMATION, ASSIGNMENT OF INVENTIONS,
AND COVENANTS NOT TO COMPETE.
5.1 CONFIDENTIAL INFORMATION. Employee acknowledges that the Company
(which term, for purposes of Section 5 shall be deemed to include Cantel,
MediVators and other affiliates of 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 has or will obtain knowledge, and that the Company will suffer serious
and irreparable damages 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.
8
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
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
9
(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 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 his employment hereunder, 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.
10
5.3 NON-COMPETE. Employee agrees that for a period of twenty-four
(24) months following the termination of Employee's employment hereunder, 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
or Canada 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 (5%) 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) infection control equipment, products, supplies or systems or (iv)
products or services for the dialysis, medical device reprocessing, or
filtration and separation markets (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.
11
5.4 NON-INTERFERENCE. Employee further agrees that for a period of
two years following termination of Employee's employment hereunder, 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 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 the Company.
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. 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.
12
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 Minntech:
Minntech Corporation
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
With a copy to:
Cantel Medical Corp.
000 Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
If to Employee:
Xxx X. Xxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 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.
MINNTECH CORPORATION
By: /s/ Xxx X. Xxxxxx
------------------
/s/ Xxx X. Xxxxxx
-----------------
Xxx X. Xxxxxx
13
With respect to the last
sentence of Section 1:
MEDIVATORS, INC.
By: /s/ Xxx X. Xxxxxx
-----------------
14
