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(c)(6)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
SteriGenics International, Inc. ("Employer" or the "Company"), a Delaware
corporation, and Xxxxx Xxxxxxx ("Employee") as of June 10, 1999. This Agreement
shall be in effect the day immediately prior to the closing of the merger
pursuant to the Merger Agreement dated as of June 10, 1999 among Ion Beam
Applications, S.A., Ion Beam Applications, G.P., IBA Acquisition Corp. and the
Company (the "Merger"), if such Merger shall occur while the Employee performs
full-time service for the Employer. If the Merger does not occur while the
Employee performs full-time service for the Employer, this Agreement shall be
null and void in its entirety. Notwithstanding the foregoing, if the Merger
occurs and if Employee's employment with the Company is terminated prior to the
date on which the Merger occurs, and if it is reasonably demonstrated by the
Employee that such termination arose in connection with or anticipation of the
Merger, then this Agreement shall be effective the date immediately prior to the
date of such termination of employment. Finally, if the Merger Agreement is
terminated and there is no Merger, this Agreement shall be null and void.
ARTICLE I
EMPLOYMENT
1.1 Term of Agreement. This Agreement shall have a term of four (4) years
from the Merger.
1.2 Services.
(a) During the term covered by this Agreement (the "Employment Period"),
Employee shall serve as Chief Executive Officer and President of Worldwide
Contract Sterilization and Materials Radiation Processing. Employee reports
solely to the Chief Executive Officer of the Company and receives his
assignments from the Chief Executive Officer of the Company. During the
Employment Period, Employee's office and primary place of business shall be
located at the Employer's offices in either Fremont, California or Hayward,
California.
(b) Employee shall devote reasonable attention and energies and his best
efforts during normal business hours to the business and affairs of Employer and
to the discharge of his duties, functions and responsibilities hereunder, and
will use his best efforts to promote the interests of Employer. Employee shall
comply with all of Employer's rules and regulations applicable to the employees
of Employer and with all of Employer's policies established by its management
and Board of Directors. It shall not be a violation of this Agreement for
Employee to serve on corporate, civic or charitable boards or committees,
deliver lectures, speeches or teach courses at educational institutions and
manage personal investments, so long as such activities do not significantly
interfere with the performance of Employee's responsibilities under this
Agreement. It is agreed and understood that the continuance of activities
conducted before the Merger will not be deemed to interfere with Employee's
responsibilities.
1.3 Compensation and Benefits.
(a) All of the Employee's unvested shares of Company common stock and all
of the Employee's unexercisable options to purchase Company common stock shall
become exercisable immediately upon the Merger and shall remain exercisable
until one year after Employee ceases to render services to the Company.
(b) During the Employment Period, Employer will pay to Employee $500,000
per year, payable in twelve (12) monthly installments of $41,666.67, subject to
applicable federal and state withholdings, for as long as Employee's status
remains that of Employee. Employee shall be entitled to participate in all
benefit plans, incentive arrangements, perquisites and programs for employees
and senior executives as are offered from time to time and as may be described
in Employer's employee benefit handbooks as long as the Employee's service
remains full-time. Employee shall be considered annually by the Compensation
Commit-
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tee of the Board for stock, stock option grants or equity equivalents in such
amounts as are competitive with awards granted to similarly situated executives
of publicly held companies comparable to the Company.
1.4 Tax Effect of Payments to Employee.
(a) Gross-Up Payment. In the event that it is determined that any payment
or distribution of any type to or for the benefit of the Employee made in
connection with the Merger by the Company, by any of its affiliates, by any
person who acquires ownership or effective control of the Company or ownership
of a substantial portion of the Company's assets (within the meaning of section
280G of the Code and the regulations thereunder) or by any affiliate of such
person, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount that shall fund the payment by the Employee of any Excise
Tax on the Total Payments as well as all income taxes imposed on the Gross-Up
Payment, any Excise Tax imposed on the Gross-Up Payment and any interest or
penalties imposed with respect to taxes on the Gross-Up Payment or any Excise
Tax.
(b) Determination by Accountant. All mathematical determinations and all
determinations of whether any of the Total Payments are "parachute payments"
(within the meaning of section 280G of the Code) that are required to be made
under this Section 1.4, including all determinations of whether a Gross-Up
Payment is required, of the amount of such Gross-Up Payment and of amounts
relevant to the last sentence of this Section 1.4, shall be made by the
independent accounting firm of Ernst & Young (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matters, both to the Company and to the Employee within seven
business days of the Merger, or such earlier or later time as is requested by
the Company or by the Employee (if the Employee reasonably believes that any of
the Total Payments may be subject to the Excise Tax). The applicable federal
rate in effect on the Day of Merger shall be used in all determinations. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with a written statement that such Accounting Firm
has concluded that no Excise Tax is payable (including the reasons therefor) and
that the Employee has substantial authority not to report any Excise Tax on the
Employee's federal income tax return. If a Gross-Up Payment is determined to be
payable, it shall be paid to the Employee within five business days after the
Determination is delivered to the Company or the Employee. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee, absent
manifest error.
(c) Underpayments and Overpayments. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the Company should have been made ("Underpayments") or that Gross-Up Payments
will have been made by the Company which should not have been made
("Overpayments"). In either event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment shall promptly be paid by the
Company to or for the benefit of the Employee. In the case of an Overpayment,
the Employee shall, at the direction and expense of the Company, take such steps
as are reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established by, the
Company and otherwise reasonably cooperate with the Company to correct such
Overpayment; provided, however, that (i) the Employee shall in no event be
obligated to return to the Company an amount greater than the net after-tax
portion of the Overpayment that the Employee has retained or has recovered as a
refund from the applicable taxing authorities and (ii) this provision shall be
interpreted in a manner consistent with the intent of this Section 1.4, which is
to make the Employee whole, on an after-tax basis, for the application of the
Excise Tax, it being understood that the correction of an Overpayment may result
in the Employee's repaying to the Company an amount which is less than the
Overpayment.
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ARTICLE II
TERMINATION OF EMPLOYMENT
2.1 Death/Disability. In the event of Employee's termination of employment
due to disability during the Employment Period, Employer shall pay to Employee
the full salary outlined in Section 1.3 of this Agreement due the Employee for
the remainder of the Employment Period to be paid in a cash lump sum payment
upon termination of employment. In the event of Employee's death during the
Employment Period, Employer shall pay to Employee's spouse (or if none survives
Employee, to his estate) the full salary outlined in Section 1.3 of this
Agreement due the Employee for the remainder of the Employment Period, to be
paid in a cash lump sum payment within 30 days after death. Upon payment of the
aforementioned sum, Employer's obligations to make further payments or provide
further employee benefits shall terminate except for Section 1.4. This provision
shall not be construed to negate any rights Employee may have to death or
disability benefits under any employee benefit or welfare plan of Employer in
which Employee may from time to time be a participant or under any other written
agreement with Employer which specifically provides for such benefits.
2.2 Rights Upon Termination. Except as expressly provided in Section 2.3,
upon termination of the Employee's employment by the Employer or the Employee,
the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 1.3 and 1.4 above for the period preceding
the effective date of the termination.
2.3 Termination Benefits.
(a) If, during the Employment Period, the Company subjects the Employee to
actual or Constructive Termination for any reason other than Cause, or if the
Employee quits within 60 days on or after the first anniversary of the Merger,
then the Company shall pay the Employee in a cash lump sum, within 5 days of the
termination (receipt of notice if the termination is "Constructive"), the fully
salary outlined in Section 1.3 of this Agreement due the Employee for the
remainder of this Employment Period. Employer shall also, for the balance of the
four-year term of this Agreement continue to provide Employee with all of the
benefits described in Section 1.3(b) above. To the extent the applicable benefit
plans, incentive arrangements, perquisites or programs described in Section
1.3(b) above prohibit the provision of such benefits to the Employee after
termination of employment, the Employer shall pay Employee the monetary
equivalent to such benefits in a cash lump sum.
(b) For the purposes of this Agreement, Constructive Termination shall
mean:
(i) any reduction in Employee's status or authority;
(ii) any reduction of Employee's responsibilities or assignment of
duties inconsistent with Employee's position or authority contemplated in
Section 1.2(a) above;
(iii) reduction of Employee's compensation or benefits; or
(iv) relocation of Employee's place of employment or a requirement to
travel to a substantially greater extent than required prior to the Merger.
Any good faith determination by Employee that there has been a
"Constructive Termination" shall be conclusive and shall be delivered to the
Company in writing.
(c) For the purposes of this Agreement, Cause shall mean:
(i) Employee's intentional unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company;
(ii) conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof; or
(iii) Employee's repeated intentional failure to perform assigned
duties after receiving written notification from the Board of Directors.
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No act or failure to act of Employee shall be "intentional" if it is
performed in good faith by the Employee with the reasonable belief that the
action or inaction was in the best interests of the Company. Employee shall not
be deemed terminated for "Cause" unless and until there has been delivered to
Employee a copy of a resolution adopted by three-quarters of the entire Board at
a meeting of the Board called and held for such purpose, provided Employee and
his counsel are given an opportunity to attend and participate in the meeting.
The minutes of such meeting shall specify in detail the grounds for termination
for Cause.
ARTICLE III
NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE
3.1 During the Employment Period (whether or not the Employee's employment
continues for the entire Employment Period), Employee shall not, directly or
indirectly, either as an individual or as an employee, agent, consultant,
advisor, independent contractor, general partner, officer, director,
stockholder, investor, lender, or in any other capacity whatsoever, of any
person, firm, corporation or partnership:
(a) Participate or engage in the design, development, manufacture,
production, marketing, sale or servicing of any product, or the provision
of any service, that directly or indirectly relates to Company business
(the "Business") as it is conducted in the United States or in any other
country in which the Company engages in Business;
(b) Induce or attempt to induce any person who at the time of such
inducement is an employee of Employer to perform work or service for any
other person or entity other than Employer; or
(c) Permit the name of Employee to be used in connection with a
competitive business.
(d) Notwithstanding the foregoing, Employee may own, directly or
indirectly, solely as an investment, up to one percent (1%) of any class of
"publicly traded securities" of any person or entity which owns a
competitive business. For the purposes of this Agreement, the term
"publicly traded securities" shall mean securities that are traded on a
national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System.
(e) If any restriction set forth in this Section 3.1 is held to be
unreasonable, the Employee agrees, and hereby submits, to the reduction and
limitation of such prohibition to such area or period as shall be deemed
reasonable.
3.2 The Employee has entered into a Proprietary Information and Inventions
Agreement with the Company, which is incorporated herein by reference.
ARTICLE IV
MISCELLANEOUS
4.1 Successors, Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Employer and its successors and assigns. If a successor
fails to expressly assume this Agreement within 5 days of the Merger, Employee
shall be entitled to the benefits stated in sections 1.3(a) and 2.3(a) on the
5th day following the Merger. This Agreement shall be binding upon Employee and
shall inure to his benefit and to the benefit of his heirs, executors,
administrators and legal representatives, but shall not be assignable by
Employee.
4.2 Entire Agreement. This Agreement constitutes the entire agreement
between Employer and Employee relating to his employment and the additional
matters herein provided for. This Agreement supersedes and replaces any prior
verbal or written agreements between the parties except as provided herein. This
Agreement may be amended or altered only in a writing signed by the Chief
Executive Officer, President or Chief Financial Officer of Employer and by
Employee.
4.3 Applicable Law, Severability. This Agreement is executed by the
parties in the State of California and shall be construed and interpreted in
accordance with the laws of that state. If any provision of this
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Agreement becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be
so amended without materially altering the intention of the parties, then such
provision shall be stricken and the remainder of this Agreement shall continue
in full force and effect. Should there ever occur any conflict between any
provision contained in this Agreement and any present or future statue, law,
ordinance or regulation contrary to which the parties have no legal right to
contract, the latter shall prevail, but the provision of this Agreement affected
thereby shall be curtailed and limited only to the extent necessary to bring it
into compliance with the law. All the other terms and provisions of this
Agreement shall continue in full force and effect without impairment or
limitation.
4.4 Arbitration. Employee agrees that any and all disputes that Employee
has with Employer or any of its employees, which arise out of Employee's
employment, the termination of employment, or under the terms of this Agreement
shall be resolved through final and binding arbitration. This shall include,
without limitation, disputes relating to this Agreement, any disputes regarding
Employee's employment by Employer or the termination thereof, claims for breach
of contract or breach of the covenant of good faith and fair dealing, and any
claims of discrimination or other claims under any federal, state or local law
or regulation now in existence or hereinafter enacted and as amended from time
to time concerning in any way the subject of Employee's employment with Employer
or its termination. The only claims not covered by this Section 4.4 are claims
for benefits under the workers' compensation laws or unemployment insurance laws
and claims for indemnification. Binding arbitration will be conducted in San
Francisco, California in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") or such other
mediation or arbitration service as shall be mutually agreeable to the parties,
and judgment upon the award rendered by the arbitrator shall be final and
binding on the parties and may be entered in any court having jurisdiction
thereof; provided, however, that any party shall be entitled to appeal a
question of law or determination of law to a court of competent jurisdiction.
Such arbitration shall be conducted by an arbitrator chosen by mutual agreement
of the parties, or failing such agreement, an arbitrator appointed by the AAA.
There shall be limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, (b) depositions of all
party witnesses, and (c) such other depositions as may be allowed by the
arbitrator upon a showing of good cause. Depositions shall be conducted in
accordance with the California Code of Civil Procedure. The arbitrator shall be
required to provide in writing to the parties the basis for the award or order
of such arbitrator, and a court reporter shall record all hearings (unless
otherwise agreed to by the parties), with such record constituting the official
transcript of such proceedings. Employee understands and agrees that the
arbitration shall be instead of any civil litigation and that the arbitrator's
decision shall be final and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof.
4.5 Attorneys' Fees. Employer shall pay Employee's attorneys' fees with
respect to the preparation of this Agreement and with respect to any and all
disputes that Employee has with Employer or any of its employees, which arise
out of Employee's employment or service to the Company, the termination of
Employee's employment or service to the Company, or under the terms of this
Agreement.
4.6 Late Payment Penalty. If any payment hereunder is not made within 15
business days of its due date, the delinquent payment shall be increased by 150%
so that the Company is liable for the delinquent payment and the penalty amount.
4.7 Indemnification and Release. The Company will indemnify Employee to
the fullest extent permitted by applicable law, and as may be provided in the
Company's bylaws, and will advance litigation costs including attorney fees. In
addition, upon a termination of employment under Section 2.3(a), the parties
shall execute mutual releases and will agree not to prosecute any legal action
or other proceeding based on the released claims.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
Dated: June 10, 1999 STERIGENICS INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx
Its: Vice President
Address: c/o SteriGenics
International, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Dated: June 10, 1999 EMPLOYEE
/s/ Xxxxx X. Xxxxxxx
Xxxxx Xxxxxxx
Address: 00 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
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EXHIBIT A
Proprietary Information and Inventions Agreement
