EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT ("AGREEMENT"), entered into between PrimeSource
Healthcare, Inc., a Massachusetts corporation ("COMPANY"), and Xxxxxxxx X.
Xxxxxx, an individual ("EXECUTIVE"), is effective upon the Initial Closing (as
defined in the Purchase Agreement dated as of August 6, 2002) (the "Effective
Date").
1. EMPLOYMENT.
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(a) EXECUTIVE RESPONSIBILITIES. The COMPANY hereby employs the
EXECUTIVE, and the EXECUTIVE hereby agrees to accept employment from the
COMPANY, as President and Chief Executive Officer of the COMPANY. The EXECUTIVE
shall report directly to the COMPANY'S Board of Directors. The EXECUTIVE agrees
during the term of his employment under this Agreement to perform the duties and
responsibilities customarily required of such position, as reasonably directed
by the COMPANY'S Board of Directors, and in accordance with the COMPANY'S bylaws
and applicable state corporation law. The EXECUTIVE further agrees to devote his
full business time and energies to the business and affairs of the COMPANY,
unless otherwise authorized by the Board of Directors of the COMPANY. The
EXECUTIVE may, however, engage in civic and not-for-profit activities so long as
such activities do not materially interfere with the performance of his duties
to the COMPANY hereunder.
(b) DIRECTOR RESPONSIBILITIES. Subject to obtaining any necessary
stockholder consents, the EXECUTIVE shall be elected a member of the Board of
Directors, to serve in such position until the next regular meeting of the
COMPANY'S stockholders. The EXECUTIVE'S continued service on the COMPANY'S Board
of Directors thereafter shall be subject to his election by vote of the
stockholders, but the COMPANY will include the EXECUTIVE in its recommended
slate of candidates for membership on the Board. In the event that the
EXECUTIVE'S employment with the COMPANY under this Agreement is terminated for
any reason, the EXECUTIVE shall promptly submit to the Chairman of the Board his
resignation as a Director.
2. TERM OF EMPLOYMENT. The employment under this Agreement shall commence
as of the Effective Date and shall end at the end of the day on the second
yearly anniversary of the Effective Date (the "EXPIRATION DATE"), unless
otherwise terminated earlier pursuant to paragraph 5 of this Agreement.
3. COMPENSATION.
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(a) BASE SALARY. As compensation for services provided to the
COMPANY, the EXECUTIVE shall receive an initial salary at the annual rate of
$250,000, less such payroll and withholding taxes as required by law to be
deducted and any such other amounts as the EXECUTIVE shall authorize in writing.
The salary shall be payable in semi-monthly installments. Such salary shall be
reviewed by the Board of Directors at least annually at the end of each year of
employment hereunder. Such salary may be increased, but not decreased, from time
to time as decided in the discretion of the Board of Directors of the COMPANY.
(b) BONUSES. The Compensation Committee of the COMPANY'S Board of
Directors shall institute an incentive bonus program in which the EXECUTIVE will
be eligible to participate during each employment year (beginning with the
fiscal year that ends immediately following the Effective Date) while the
EXECUTIVE is employed by the COMPANY. Such bonus program shall provide the
EXECUTIVE a bonus based upon factors established by the Chairman of the
Compensation Committee, after consultation with the EXECUTIVE, and approved by
the Board of Directors; provided that, such annual bonus shall never be less
than $50,000.
(c) EQUITY COMPENSATION.
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(i) INITIAL OPTION TO PURCHASE COMMON STOCK. Upon the Effective
Date, the COMPANY shall grant to the EXECUTIVE an incentive stock option to
purchase 1,950,000 shares of Common Stock of COMPANY at an exercise price per
share equal to the fair market value of a share of Common Stock of the COMPANY
on the date of grant, as determined by the Board of Directors. Such options
shall be issued pursuant to, and their exercise and the issuance of shares upon
exercise shall be subject to, the terms and conditions of the Tucson Medical
Corporation 1997 Incentive Stock Option/Issuance Plan, as amended (or any
successor plan thereto) (the "PLAN"), the corresponding Stock Option Agreement
and Notice of Grant of Stock Option contemplated by the Plan (the "OPTION
AGREEMENT") and this Agreement. Notwithstanding anything in this Agreement to
the contrary, none of the options granted to EXECUTIVE shall be exercisable
until the Plan has reserved and available for issuance a sufficient amount of
Common Stock of the COMPANY to issue such Common Stock upon such exercise.
(ii) INITIAL OPTION TO PURCHASE SERIES G PREFERRED STOCK. Upon
the Effective Date, the COMPANY shall grant to the EXECUTIVE an option to
purchase 7,500 shares of Series G Preferred Stock of COMPANY at an exercise
price per share equal to $16. Such options shall be issued pursuant to, and
their exercise and the issuance of shares upon exercise shall be subject to, the
terms and conditions of a stock option agreement containing customary terms and
conditions and this Agreement.
(iii) SUBSEQUENT OPTION TO PURCHASE COMMON STOCK. Upon the first
anniversary of the Effective Date, provided the EXECUTIVE is employed by the
COMPANY on such date, the COMPANY shall grant to the EXECUTIVE an incentive
stock option to purchase 1,300,000 shares of Common Stock of COMPANY at an
exercise price per share equal to the fair market value of a share of Common
Stock of the COMPANY on the date of grant, as determined by the Board of
Directors. Such options shall be issued pursuant to, and their exercise and the
issuance of shares upon exercise shall be subject to, the terms and conditions
of the Plan, the corresponding Option Agreement and this Agreement.
Notwithstanding anything in this Agreement to the contrary, none of the options
granted to EXECUTIVE shall be exercisable until the Plan has reserved and
available for issuance a sufficient amount of Common Stock of the COMPANY to
issue such Common Stock upon such exercise.
(iv) VESTING OF OPTIONS. The EXECUTIVE'S stock options described
in this paragraph 3(c) shall become fully vested and exercisable on the first
anniversary of the date of grant of each such option. Should the EXECUTIVE'S
employment be terminated by the COMPANY pursuant to paragraph 5(b) or be deemed
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to be terminated by the COMPANY pursuant to paragraph 5(g), all stock options
granted to the EXECUTIVE pursuant to this Agreement shall immediately vest and
shall remain exercisable for such period of time as provided in the Plan or
respective stock option agreement.
(v) CHANGE IN CONTROL. Upon a Change in Control (as defined in
Annex A hereto), notwithstanding the vesting schedule described in paragraph
3(c)(iv), all of the total stock options granted to the EXECUTIVE under this
paragraph 3(c) that have not yet vested as of the effective date of such Change
in Control shall become fully vested and exercisable on the effective date of
such Change in Control.
(vi) OTHER ACCELERATION OF VESTING; OTHER TERMS. The acceleration
of vesting provided for in the preceding subparagraphs is in addition to, and
not in lieu of, the acceleration of vesting of stock options provided for under
the Plan or the respective stock option agreements under the circumstances
described in the Plan or such stock option agreement. In addition, each Option
Agreement shall (1) provide for incentive stock options to the extent consistent
with the terms of the options, (2) provide for a ten-year term, (3) allow the
EXECUTIVE to exercise such options during the period following termination of
employment that is the lesser of (x) one (1) year following the effective date
of a registration statement (pursuant to Form S-8 or otherwise) covering the
option shares of EXECUTIVE'S options granted hereunder or (y) five (5) years,
(4) afford the option holder the greatest latitude in manner of exercise
permitted by the Plan, (5) not grant the COMPANY repurchase rights as to shares
acquired by exercise of options other than as set forth in this Agreement, and
(6) otherwise be in substantially the form of the standard form of stock option
agreement under the Plan, subject to the terms set forth in this Agreement.
(vii) SECURITIES REGISTRATION. The COMPANY shall use commercially
reasonable efforts to cause all of the EXECUTIVE'S stock options granted
pursuant to paragraphs 3(c)(i) and 3(c)(iii), and the issuance of shares upon
exercise thereof, to be included in an effective registration statement on Form
S-8 (or any successor form) under the Securities Act of 1933, as amended, as
soon as reasonably practicable following the Effective Date.
4. PARTICIPATION IN BENEFIT PLANS, REIMBURSEMENT OF BUSINESS EXPENSES.
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(a) BENEFIT PLANS. During the term of this Agreement, the EXECUTIVE
shall be provided with medical insurance, dental benefits, sick leave benefits,
time off for holidays and other benefits which are not less than, and on terms
no less favorable than, those the COMPANY provides to its other executive
employees. At it's option, in lieu of providing the EXECUTIVE with any such
benefit, the COMPANY may reimburse the EXECUTIVE for the EXECUTIVE'S cost of
providing such benefit himself.
(b) VACATION. The EXECUTIVE shall be entitled to four (4) weeks of
paid vacation each year. The EXECUTIVE may not accrue more than six (6) weeks of
vacation at any given time.
(c) REIMBURSEMENT OF BUSINESS EXPENSES. The COMPANY shall reimburse
the EXECUTIVE promptly for all expenditures made by him during the term of this
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Agreement, which expenses are incurred to further the business and interests of
the COMPANY, including, but not limited to, travel, entertainment, parking and
expenses incurred in connection with business meetings (including, but not
limited to, the dues and business related expenses of memberships at appropriate
business clubs, provided such memberships are approved in writing by the
Chairman of the Board of the COMPANY), provided such expenses are incurred and
submitted for reimbursement in accordance with the policies established by the
Board of Directors in effect as of the date the expenses are incurred.
(d) LEGAL EXPENSES. The COMPANY will reimburse the EXECUTIVE for
actual legal fees and expenses incurred by him in connection with the review and
negotiation of this Agreement and ancillary documents, up to a maximum of
$2,500.
(e) INDEMNIFICATION. The EXECUTIVE shall be entitled to
indemnification and advancement of expenses to the fullest extent provided, in
the COMPANY'S bylaws or otherwise, to any other director or executive officer of
the COMPANY, unless prohibited by law. EXECUTIVE shall also be entitled to
coverage under each directors' and officers' liability insurance policy, if any,
maintained by or on behalf the COMPANY'S directors and officers.
5. TERMINATION OF EMPLOYMENT.
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(a) AUTOMATIC TERMINATION. The EXECUTIVE'S employment shall
automatically terminate upon the earliest to occur of (1) the EXECUTIVE'S death,
(2) the EXECUTIVE'S disability that has prevented EXECUTIVE from performing
substantially all of his duties and responsibilities for a continuous period of
120 days or (3) the Expiration Date. The COMPANY shall have no further
obligations to the EXECUTIVE or his estate upon such automatic termination,
except (i) to honor the exercise of any stock options that have vested prior to
or as of the date of such termination, subject to the applicable conditions of
the Plan or respective stock option agreement, (ii) as provided by law or under
the terms of any life insurance or permanent disability benefit and any other
applicable benefit plan in which the EXECUTIVE participated immediately prior to
the termination of his employment, (iii) to pay any accrued but unpaid salary
and accrued but unused vacation of the EXECUTIVE through the effective date of
termination, (iv) to reimburse the EXECUTIVE for any expenses incurred by him
before the effective date of termination that are otherwise subject to
reimbursement under paragraph 4(c) above, and (v) to pay any accrued but unpaid
bonus earned by the EXECUTIVE with respect to a completed performance period.
(b) TERMINATION OTHER THAN FOR CAUSE. The COMPANY may terminate the
EXECUTIVE'S employment with the COMPANY other than for Cause at any time,
provided it gives at least 30 days' prior written notice to the EXECUTIVE of
such termination. In the event that the COMPANY terminates the EXECUTIVE'S
employment under this Agreement other than for Cause, the COMPANY shall pay to
the EXECUTIVE a lump sum amount equal to the lesser of (i) six (6) months of the
EXECUTIVE'S base salary in effect at the time the COMPANY gives the EXECUTIVE
notice of termination or (ii) the EXECUTIVE'S base salary from the effective
date of such termination through the Expiration Date. If the COMPANY terminates
the EXECUTIVE'S employment under this Agreement without Cause at any time within
twelve (12) months after the effective date of Change in Control, the COMPANY
shall pay the EXECUTIVE, in a lump sum at the effective time of such
termination, an amount equal to the EXECUTIVE'S base salary from the effective
date of such termination through the Expiration Date; such lump-sum
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Change-in-Control payment shall be made in lieu of the continuation of payment
of base salary under the preceding sentences in this paragraph 5(b). In addition
to the foregoing payments, the EXECUTIVE shall also receive any accrued but
unpaid salary and accrued but unused vacation through the effective date of such
termination, reimbursement for any expenses incurred by him prior to the
effective date of such termination that are otherwise subject to reimbursement
under paragraph 4(c) above, any accrued but unpaid benefits to which the
EXECUTIVE is then entitled under the terms of the COMPANY'S benefit plans and
policies in which the EXECUTIVE is enrolled, to be payable in accordance with
the terms of such plans and policies, and any accrued but unpaid bonus earned by
EXECUTIVE with respect to a completed performance period. All payments and other
termination benefits paid hereunder shall be less any applicable payroll and
withholding taxes or other legally required deductions. As a condition to his
receipt of any payments provided for in this paragraph 5(b), the EXECUTIVE must
first execute a waiver and release of claims the EXECUTIVE may have against the
COMPANY, in a form reasonably determined by the COMPANY. In the event of the
EXECUTIVE'S termination of employment under this paragraph 5(b), the EXECUTIVE
shall have no obligation to mitigate his damages or to seek other employment as
a condition to receiving any payments or other termination benefits hereunder.
(c) TERMINATION FOR CAUSE. Notwithstanding the provisions of
paragraph 5(b) above, the COMPANY may terminate the EXECUTIVE'S employment for
Cause. For purposes of this Agreement, the COMPANY shall have "Cause" to
terminate the EXECUTIVE'S employment in the event of any of the following:
(i) Conviction of the EXECUTIVE, or the EXECUTIVE'S plea of nolo
contendere, for (x) any crime involving moral turpitude or
dishonesty, or (y) any felony other than non-recurring
traffic violations (e.g., driving under the influence);
(ii) The EXECUTIVE'S willful participation in any material fraud
or act of dishonesty against the COMPANY including engaging
in any material transaction that represents, directly or
indirectly, self-dealing with the COMPANY that has not been
approved by a majority of the disinterested directors of the
Board or is not part of the terms of the EXECUTIVE'S
employment;
(iii)The EXECUTIVE'S willful action or willful omission that
materially injures the reputation, business or business
relationships of the COMPANY;
(iv) Breach by the EXECUTIVE of any material obligation under
this Agreement;
(v) The repeated non-prescription abuse of any controlled
substance or the repeated abuse of alcohol or any other
non-controlled substance which, in any case described in
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this clause, the Board reasonably determines renders the
EXECUTIVE unfit to serve in his capacity as an officer or
employee of the COMPANY;
(vi) Continued willful failure by the EXECUTIVE to perform the
material aspects of the EXECUTIVE'S duties and
responsibilities after receiving written warning from the
Board specifying the duties or responsibilities which the
EXECUTIVE has failed to perform; or
(vii)Recurring conduct by the EXECUTIVE that in the good faith
and reasonable determination of the COMPANY'S Board of
Directors demonstrates gross unfitness to serve as an
executive employee of the COMPANY.
Physical or mental disability, or conduct resulting from physical or
mental disability, of the EXECUTIVE shall not constitute "Cause." No termination
of the EXECUTIVE'S employment shall be deemed for "Cause" unless (A) at least a
majority of the Board of Directors of the COMPANY, excluding the EXECUTIVE,
determines (by vote or consent) that at least one of the events described in
clauses (i) through (vii) of this paragraph 5(c) has occurred within six (6)
months before such determination, (B) the Board of Directors has given the
EXECUTIVE written notice of its intention to terminate the EXECUTIVE'S
employment for Cause, specifying with reasonable particularity the grounds on
which the proposed termination for Cause is contemplated, and (C) the EXECUTIVE
has been afforded a reasonable opportunity to meet with the Board of Directors
of the COMPANY to discuss the proposed termination for Cause. In the event the
EXECUTIVE'S employment is terminated for Cause, he will not be entitled to
receive any severance compensation or other benefits, except that the EXECUTIVE
shall be entitled to receive accrued but unpaid salary and accrued but unused
vacation through the effective date of such termination, reimbursement for any
expenses incurred by him prior to the effective date of his termination that are
otherwise subject to reimbursement under paragraph 4(c) above, any accrued but
unpaid benefits to which the EXECUTIVE is then entitled under the terms of the
COMPANY'S benefit plans and policies in which the EXECUTIVE is enrolled, to be
payable in accordance with the terms of such plans and policies, and any accrued
but unpaid bonus earned by the EXECUTIVE with respect to a completed performance
period.
(d) RESIGNATION. The EXECUTIVE retains the right to resign or
otherwise voluntarily terminate his employment with the COMPANY upon 30 days'
written notice to the Chairman of the Board. In the event the EXECUTIVE resigns
or otherwise voluntarily terminates his employment with the COMPANY, the
EXECUTIVE shall not be entitled to any severance compensation or other benefits
beyond the effective date of his resignation, except that the EXECUTIVE shall be
entitled to the payments and benefits provided under paragraph 5(a) above.
(e) STOCK OPTIONS. Subject to the provisions of paragraph 3(c) above,
only the shares subject to the stock options granted to EXECUTIVE under this
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Agreement that have vested prior to the date of the termination of or his
resignation from his employment under this Agreement may be exercised by the
EXECUTIVE, such exercise to be subject to the conditions set forth in the Plan
and/or any applicable stock option agreement. Any stock options that are
unvested (and not deemed vested under some provision of this Agreement, the Plan
or any applicable stock option agreement) as of the date of EXECUTIVE'S
termination shall be forfeited.
(f) NO RESTRICTION ON COBRA RIGHTS. Nothing in this paragraph 5 shall
be deemed to impair or limit any of the EXECUTIVE'S rights under the
Consolidated Omnibus Benefits Reconciliation Act.
(g) DEEMED TERMINATION. The EXECUTIVE may elect to deem the
occurrence of any event described in (i), (ii) or (iii) below to be a
termination of the EXECUTIVE'S employment by the COMPANY other than for Cause
for all purposes under this Agreement, provided the EXECUTIVE so notifies the
Chairman of the Board of the COMPANY in writing of such event and the COMPANY
does not remedy such situation within 30 days of receipt of the EXECUTIVE'S
notice. Any such election by the EXECUTIVE shall not be deemed a voluntary
resignation by him. The failure of the COMPANY'S stockholders to elect the
EXECUTIVE to the Board shall not be deemed a termination of employment under
this Agreement; PROVIDED THAT, the EXECUTIVE has been nominated for election as
provided in paragraph 1(b) above. Unless otherwise agreed to by the EXECUTIVE,
the following events may give rise to a deemed termination under this paragraph
5(g):
(i) The removal of the EXECUTIVE from his position of Chief
Executive Officer of the COMPANY or any successor to the
COMPANY (whether by merger, consolidation, reorganization or
sale of all or substantially all of the assets of the
COMPANY) or the assignment to the EXECUTIVE of any duties
inconsistent with his status as Chief Executive Officer of
the COMPANY or any successor to the COMPANY;
(ii) Any material decrease or adverse change in the nature or
scope of the EXECUTIVE'S authority, power, functions,
responsibilities or duties or any requirement that the
EXECUTIVE report to any person or persons other than the
Board of Directors of the COMPANY or any successor to the
COMPANY;
(iii)A demand by the COMPANY that the EXECUTIVE relocate from
his then-current place of residence.
6. NONCOMPETITION, CONFIDENTIALITY, FREEDOM TO ENTER INTO AND PERFORM AND
CONFLICTS OF INTEREST.
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(a) CONFIDENTIAL INFORMATION. The EXECUTIVE agrees and understands
that, due to the nature of his position with the COMPANY, he will gain
possession of confidential information about the COMPANY and the way it conducts
its business. The EXECUTIVE shall not, directly or indirectly, either during the
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period of the EXECUTIVE'S employment under this Agreement or thereafter,
disclose to anyone (except in the regular course of the COMPANY'S business or as
required by deposition, interrogatory, civil investigative demand, applicable
law or subpoena), or use in competition with the COMPANY, any non-public and
proprietary information acquired by the EXECUTIVE during his employment by the
COMPANY hereunder with respect to any confidential or secret aspect of the
COMPANY'S operations, business, affairs, plans, prospects, strategies or
condition (financial or otherwise), unless such information has become public
knowledge other than by reason of actions (direct or indirect) of the EXECUTIVE.
The EXECUTIVE'S duties and obligations under this paragraph shall survive
termination of his employment with the COMPANY. The EXECUTIVE acknowledges that
a remedy at law for any breach or overtly threatened breach by him of the
provisions of this paragraph would be inadequate to protect the COMPANY against
the consequences of such breach, and he therefore agrees that the COMPANY shall
be entitled to injunctive relief in case of any such breach or overtly
threatened breach.
(b) RESTRICTIVE COVENANT. During the period beginning on the date of
the EXECUTIVE'S employment by the COMPANY hereunder and ending one (1) year
after such employment terminates for any reason (the "Non-Compete Term"), the
EXECUTIVE agrees not to, at any time, directly or indirectly, whether or not for
compensation, engage in, or have any interest in, any person, firm, corporation
or business (whether as an employee, security holder, proprietor, officer,
director, agent, trustee, consultant, partner, creditor or otherwise) that
engages in or operates a business that includes distributing, manufacturing,
selling or marketing of products or services in competition with the products or
services distributed, manufactured, sold or marketed by the COMPANY, or under
active development by the COMPANY, during the EXECUTIVE'S employment under this
Agreement (the "Business") in any state in the United States or in any other
jurisdiction outside the United States in which the COMPANY or any of its
subsidiaries or affiliates conducted the Business; provided, however, that
during the Non-Compete Term, the EXECUTIVE may own shares of companies whose
securities are publicly traded, so long as the securities so owned do not
constitute more than five (5%) percent of the outstanding securities of such
company (unless such company is the COMPANY, in which case no limit shall
apply). The provisions of this paragraph 6(b) shall apply both during normal
working hours and at all other times including, but not limited to, nights,
weekends and vacation time during the Non-Compete Term. The EXECUTIVE
acknowledges that a remedy at law for any breach or overtly threatened breach by
him of the provisions of this paragraph 6(b) would be inadequate to protect the
COMPANY against the consequences of such breach, and he therefore agrees that
the COMPANY shall be entitled to injunctive relief in case of any such breach or
overtly threatened breach.
(c) FREEDOM TO ENTER INTO AND PERFORM THIS AGREEMENT. The EXECUTIVE
represents and warrants to the COMPANY that he is subject to no restrictions,
either by virtue of any agreement made by him or for his benefit, or by
operation of law, that would prohibit, prevent or interfere with in any way his
entering into, or his performing fully and without restriction, his obligations
under this Agreement, or which would render the COMPANY liable to a third party
as a result of the EXECUTIVE'S entering into or performing his obligations under
this Agreement.
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(d) CONFLICTS OF INTEREST. During the Non-Compete Term, the EXECUTIVE
agrees not to acquire, assume or participate in, directly or indirectly, any
position, investment or interest known by him to be adverse or antagonistic to
the COMPANY, its business or prospects, financial or otherwise. However, the
EXECUTIVE may own, as a passive investor only, securities of any publicly traded
companies, provided his beneficial ownership of the stock of any one such
corporation does not exceed 5% of such corporation's voting stock.
(e) NON-SOLICITATION. During the Non-Compete Term, the EXECUTIVE
agrees not to solicit for, or divert or attempt to divert, directly or
indirectly, any business of any of the COMPANY or its subsidiaries, that is or
was (in each case) part of the Business or under active development by the
Business during the EXECUTIVE'S employment under this Agreement, or any
customers or suppliers of the COMPANY or its subsidiaries, that is or was (in
each case) part of the Business or under active development to incorporate into
the Business during the EXECUTIVE'S employment under this Agreement to any
competitor of the same. The EXECUTIVE agrees that during the Non-Compete Term,
he shall not interfere with the business of the COMPANY by directly or
indirectly soliciting, attempting to solicit, inducing or otherwise deliberately
causing any person who at any time within the previous one (1) year period shall
have been an employee or independent contractor of the COMPANY or its
subsidiaries to terminate his or her employment to become employed by or
associated with any other person, firm or corporation, and the EXECUTIVE shall
not approach any such employee or independent contractor for such purpose or
authorize or knowingly approve the taking of such actions by any other person,
firm or corporation or assist any such person, firm or corporation in taking
such action. Nothing in this paragraph 6(e) shall prevent the EXECUTIVE from,
directly or indirectly, employing or contracting with any person who contacts
the EXECUTIVE, or any other person, firm, or corporation with which the
EXECUTIVE may be associated, on such person's own initiative without any
solicitation by or encouragement from the EXECUTIVE or shall apply to any
solicitation directed at the public or the industry in general, and not targeted
to particular employees or independent contractors of the COMPANY or its
subsidiaries described in the immediately preceding sentence.
7. NOTICES. For purposes of this Agreement, all notices and other
communications required or permitted by this Agreement shall be in writing or
via facsimile and shall be deemed to have been duly given, in the case of
facsimile transmission, on the business day following the day sent, and
otherwise when delivered in person or by courier or on the earlier of delivery
or the fourth business day after mailing by United States Registered or
Certified Mail, return receipt requested, postage prepaid, addressed as follows:
If to the EXECUTIVE: Xx. Xxxxxxxx X. Xxxxxx
0000 XX 00xx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
Fax: 000-000-0000
If to the COMPANY: PrimeSource Healthcare, Inc.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
Attn: Chairman of the Board
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With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxx Xxxx, Esq.
or at such other address as the addressee may have furnished to the other party
in writing subsequent to the execution of this Agreement or, in the case of the
EXECUTIVE, to any other permanent address listed for him in the COMPANY'S
records, or, in the case of the COMPANY, to the address known by the EXECUTIVE
to be where the office of the Chairman of the Board of the COMPANY is located.
8. MODIFICATIONS; WAIVERS; APPLICABLE LAW. No provision in this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, signed by the EXECUTIVE and by the Chairman
of the Board of the COMPANY. This Agreement and the employment relationship
hereunder shall be governed by, construed in accordance with and enforced under
applicable federal law and the laws of the State of Arizona without regard to
its principles of conflict of laws that would defer to the substantive laws of
another jurisdiction.
9. SEVERABILITY. If any provision of this Agreement is determined to be
invalid or is in any way modified by any governmental agency, tribunal, or court
of competent jurisdiction, such determination shall be considered as a separate,
distinct, and independent part of this Agreement and shall not affect the
validity or enforceability of any of the remaining provisions of this Agreement.
10. SUCCESSOR RIGHTS AND ASSIGNMENT. This Agreement shall bind, inure to
the benefit of and be enforceable by the EXECUTIVE'S personal or legal
representatives, executors, administrators, successors, heirs, distributees, and
legatees. The rights and obligations of the COMPANY under this Agreement may be
assigned by the COMPANY as part of the assignment or transfer (including,
without limitation, by merger or other event resulting in such assignment by
operation of law) of all or substantially all of the COMPANY'S assets and
business, provided that at the time of such assignment the assignee has the
ability to meet the obligations to the EXECUTIVE set forth in this Agreement, in
which event this Agreement shall be binding upon, and inure to the benefit of,
the person(s) or entity(ies) to whom it is assigned. The EXECUTIVE may not
assign his duties hereunder and he may not assign any of his rights hereunder
without the written consent of the COMPANY.
11. SURVIVAL OF PROVISIONS. The respective rights and obligations of the
COMPANY and the EXECUTIVE under this Agreement shall survive any termination or
other cessation of the EXECUTIVE'S employment to the extent necessary to give
full effect to the agreements and covenants set forth in this Agreement.
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IN WITNESS WHEREOF, the EXECUTIVE and the COMPANY have executed this
Agreement effective as of the Initial Closing.
EXECUTIVE:
/s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
COMPANY:
By: /s/ Xxxxx XxXxxxx
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Name: Xxxxx XxXxxxx
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Its: Chief Financial Officer
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ANNEX A
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CERTAIN DEFINITIONS
(1) "BENEFICIAL OWNER" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
(2) A "CHANGE IN CONTROL" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(a) any Person (as defined in this Annex A) is or becomes the
Beneficial Owner (as defined in this Annex A), directly or indirectly,
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its affiliates) representing 50% or more of the
combined voting power of the COMPANY'S then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection
with a transaction described in clause (i) of paragraph (c) below; or
(b) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 50% of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 50%
or more of the combined voting power of the COMPANY'S then outstanding
securities; or
(c) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the COMPANY'S assets, other than a sale or
disposition by the Company of all or substantially all of the
COMPANY'S assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by stockholders of
the Company in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred solely by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(3) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
(4) "EXCHANGE ACT" shall mean the Securities Exchange act of 1934, as amended
from time to time.
(5) "EXCISE TAX" shall mean any excise tax imposed under section 4999 of the
Code.
(6) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
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