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EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 23rd day of July, 1998, between
STERIS Corporation, an Ohio corporation ("STERIS"), and XXXX X. XXXXXXX
("Executive").
STERIS is entering into this Agreement in recognition of the importance of
Executive's services to the continuity of management of STERIS and based upon
its determination that it will be in the best interests of STERIS to encourage
Executive's continued attention and dedication to Executive's duties in the
potentially disruptive circumstances of a possible Change of Control of STERIS.
(As used in this Agreement, the term "Change of Control" and certain other
capitalized terms have the meanings ascribed to them in Section 7, at the end of
this Agreement.)
STERIS and Executive agree, effective as of the date first set forth above (the
"Effective Date"), as follows:
1. Basic Severance Benefits. The benefits described in the subsections of this
Section 1 are subject to the limitations set forth in Subsections 4.1 (regarding
withholding) and 4.2 (requiring the execution of a waiver and release by
Executive).
1.1 Lump Sum Severance Benefit if Employment is Terminated in Certain
Circumstances Within Two Years of a Change of Control. If, within two years
following the occurrence of a Change of Control, Executive's employment with
STERIS is terminated
(a) by STERIS for any reason other than Cause, Disability, or death,
(b) by Executive after a Reduction of Compensation or a Mandatory
Relocation has occurred, or
(c) by Executive following a determination in good faith by Executive
that as a result of a Change of control he is unable to carry out the
authorities, powers, functions, responsibilities, or duties that he had
in his position as Chairman, President, and Chief Executive Officer of
STERIS before the Change of Control in the same manner, with the same
discretion, and to the same extent as he was able to carry out the
authorities, powers, functions, responsibilities, or duties attached to
those positions as in effect before the Change of Control,
STERIS shall pay to Executive, within 30 days after the Termination Date, a lump
sum severance benefit equal to three times the sum of
(x) one year's Base Salary (at the highest rate in effect at any time
during the one year period ending on the date of the Change of Control),
plus
(y) Executive's Average Annual Incentive Compensation.
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1.2 Accrued Base Salary and Vacation Pay. If Executive becomes entitled
to payment of a lump sum severance benefit under Subsection 1.1 above, STERIS
shall, within 10 days after the Termination Date, pay to Executive (a) all Base
Salary accrued through the Termination Date but not previously paid and (b) a
cash payment equal to the value of any vacation time accrued through the
Termination Date but not used by Executive (valued at a rate equal to
Executive's Base Salary at the highest rate in effect at any time during the one
year period ending on the date of the Change of Control).
1.3 Special Prior Year MICP Payments. If Executive becomes entitled to
payment of a lump sum severance benefit under Subsection 1.1 above and the
Termination Date occurs on the last day of or after the end of a Fiscal Year but
before STERIS makes final MICP payments with respect to that Fiscal Year, STERIS
shall pay to Executive, at the regularly scheduled time for such final MICP
payments (the "Regular Payment Date"), but in any event not later than 60 days
after the end of the Fiscal Year, as incentive compensation, the same amount or
amounts that STERIS would have paid to Executive as incentive compensation with
respect to that Fiscal Year at the Regular Payment Date if Executive's
employment had continued through the Regular Payment Date. This Subsection 1.4
is intended to override any provision of the MICP that would otherwise cause
Executive to forfeit any incentive compensation with respect to any Fiscal Year
that ends on or before the Termination Date because Executive does not remain in
the employ of STERIS through the Regular Payment Date with respect to that
Fiscal Year.
1.4 Special Pro-Rata MICP Payment. If Executive becomes entitled to
payment of a lump sum severance benefit under Subsection 1.1 above and the
Termination Date occurs on other than the last day of a Fiscal Year, in addition
to the payment, if any, provided for in Subsection 1.3 above, STERIS shall,
within 60 days after the end of the calendar quarter in which the Termination
Date occurs, pay to Executive, as additional incentive compensation for the
period from the first day of the Fiscal Year in which the Termination Date
occurs through the Termination Date (the "Pre-Termination Part Year"), an amount
equal to the excess of:
(a) the product of the fraction specified in the last sentence of this
Subsection 1.4 and the higher of(i) Executive's Target Annual Incentive
Compensation and (ii) the dollar amount of the cumulative award that
would have been payable to Executive under the MICP for that entire
Fiscal Year had the level of relevant performance through the end of the
Fiscal Year equaled the level of relevant performance through the last
calendar quarter, if any, in that Fiscal Year that ended before the
Termination Date, over
(b) the amount of incentive compensation previously paid to Executive
with respect to that Fiscal Year.
The fraction to be used in calculating the amount to be paid under this
Subsection 1.4 shall have a numerator equal to the number of days in the
Pre-Termination Part Year and a denominator of 365.
1.5 Continued Health, Dental, and Life Insurance Coverage. If Executive
becomes entitled to payment of a lump sum severance benefit under Subsection 1.1
above, STERIS shall, during the period from the Termination Date through the
third anniversary of the Termination Date,
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continue to provide Executive with the same health, dental, and life insurance
coverage and benefits that were being provided to Executive immediately before
the Change of Control. If Executive becomes entitled to payment of a lump sum
severance benefit under Subsection 1.2 above, STERIS shall, during the period
from the Termination Date through the second anniversary of the Termination
Date, continue to provide Executive with the same health, dental, and life
insurance coverage and benefits that were being provided to Executive
immediately before the Change of Control. Coverage and benefits to be provided
under this Subsection 1.5 shall be provided to Executive at the same cost, if
any, to Executive as they were provided to Executive immediately before the
Change of Control.
2. Other Benefits.
2.1 Reimbursement of Certain Expenses After a Change of Control.
(a) From and after a Change of Control, STERIS shall pay, as incurred,
all expenses of Executive, including the reasonable fees of counsel
engaged by Executive, of defending any action brought to have this
Agreement declared invalid or unenforceable.
(b) From and after a Change of Control, STERIS shall pay, as incurred,
all expenses of Executive, including the reasonable fees of counsel
engaged by Executive, of prosecuting any action to compel STERIS to
comply with the terms of this Agreement upon receipt from Executive of
an undertaking to repay STERIS for such expenses if, and only if, it is
ultimately determined by a court of competent jurisdiction that
Executive had no reasonable grounds for bringing that action (which
determination need not be made simply because Executive fails to succeed
in the action).
(c) From and alter a Change of Control, expenses (including attorney's
fees) incurred by Executive in defending any action, suit, or proceeding
commenced or threatened (whether before or after the Change of Control)
against Executive for any action or failure to act as an employee,
officer, or director of STERIS or any Subsidiary shall be paid by
STERIS, as they are incurred, in advance of final disposition of the
action, suit, or proceeding upon receipt of an undertaking by or on
behalf of Executive in which Executive agrees to reasonably cooperate
with STERIS or the Subsidiary, as the case may be, concerning the
action, suit, or proceeding, and (i) if the action, suit, or proceeding
is commenced or threatened against Executive for any action or failure
to act as a director, to repay the amount if it is proved by clear and
convincing evidence in a court of competent jurisdiction that
Executive's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to STERIS or a
Subsidiary or undertaken with reckless disregard for the best interests
of STERIS or a Subsidiary, or (ii) if the action, suit, or proceeding is
commenced or threatened against Executive for any action or failure to
act as an officer or employee, to repay the amount if it is ultimately
determined that Executive is not entitled to be indemnified.
2.2 Indemnification. From and after a Change of Control, STERIS shall
indemnify Executive, to the full extent permitted or authorized by the Ohio
General Corporation Law as it may from time to time be amended, if Executive is
(whether before or after the Change of
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Control) made or threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that Executive is or was a director,
officer, or employee of STERIS or any Subsidiary, or is or was serving at the
request of STERIS or any Subsidiary as a director, trustee, officer, or employee
of a corporation, partnership, joint venture, trust, or other enterprise. The
indemnification provided by this Subsection 2.2 shall not be deemed exclusive of
any other rights to which Executive may be entitled under the articles of
incorporation or the regulations of STERIS or of any Subsidiary, or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in Executive's official capacity and as to action in another
capacity while holding such office, and shall continue as to Executive after
Executive has ceased to be a director, trustee, officer, or employee and shall
inure to the benefit of the heirs, executors, and administrators of Executive.
2.3 Disability. If, after a Change of Control and prior to the
Termination Date, Executive is unable to perform services for STERIS for any
period by reason of disability, STERIS will pay and provide to Executive all
compensation and benefits to which Executive would have been entitled had
Executive continued to be actively employed by STERIS through the earliest of
the following dates: (a) the first date on which Executive is no longer so
disabled to such an extent that Executive is unable to perform services for
STERIS, (b) the date on which Executive becomes eligible for payment of long
term disability benefits under a long term disability plan generally applicable
to executives of STERIS, (c) the date on which STERIS has paid and provided 24
months of compensation and benefits to Executive during Executive's disability,
or (d) the date of Executive's death.
2.4 Gross-Up of Payments Deemed to be Excess Parachute Payments.
(a) STERIS and Executive acknowledge that, following a Change of
Control, one or more payments or distributions to be made by STERIS to
or for the benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement, under some
other plan, agreement, or arrangement, or otherwise, and including,
without limitation, any income recognized by Executive upon exercise of
an option granted by STERIS to acquire Common Shares issued by STERIS)
(a "Payment") may be determined to be an "excess parachute payment" that
is not deductible by STERIS for federal income tax purposes and with
respect to which Executive will be subject to an excise tax because of
Sections 280G and 4999, respectively, of the Internal Revenue Code
(hereinafter referred to respectively as "Section 280G" and "Section
4999"). If Executive's employment is terminated after a Change of
Control occurs, the Accounting Firm, which, subject to any inconsistent
position asserted by the Internal Revenue Service, shall make all
determinations required to be made under this Subsection 2.4, shall
determine whether any Payment would be an excess parachute payment and
shall communicate its determination, together with detailed supporting
calculations, to STERIS and to Executive within 30 days after the
Termination Date or such earlier time as is requested by STERIS. STERIS
and Executive shall cooperate with each other and the Accounting Firm
and shall provide necessary information so that the Accounting Firm may
make all such determinations. STERIS shall pay all of the fees of the
Accounting Firm for services performed by the Accounting Firm as
contemplated in this Subsection 2.4.
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(b) If the Accounting Firm determines that any Payment gives rise,
directly or indirectly, to liability on the part of Executive for excise
tax under Section 4999 (and/or any penalties and/or interest with
respect to any such excise tax), STERIS shall make additional cash
payments to Executive, from time to time and at the same time as any
Payment constituting an excess parachute payment is paid or provided to
Executive, in such amounts as are necessary to put Executive in the same
position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999, or otherwise, or other
taxes) and any and all penalties and interest with respect to any such
excise tax, as Executive would have been in after payment of all
federal, state, and local income taxes if the Payments had not given
rise to an excise tax under Section 4999 and no such penalties or
interest had been imposed.
(c) If the Internal Revenue Service determines that any Payment gives
rise, directly or indirectly, to liability on the part of Executive for
excise tax under Section 4999 (and/or any penalties and/or interest with
respect to any such excise tax) in excess of the amount, if any,
previously determined by the Accounting Firm, STERIS shall make further
additional cash payments to Executive not later than the due date of any
payment indicated by the Internal Revenue Service with respect to these
matters, in such amounts as are necessary to put Executive in the same
position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999, or otherwise, or other
taxes) and any and all penalties and interest with respect to any such
excise tax, as Executive would have been in after payment of all
federal, state, and local income taxes if the Payments had not given
rise to an excise tax under Section 4999 and no such penalties or
interest had been imposed.
(d) If STERIS desires to contest any determination by the Internal
Revenue Service with respect to the amount of excise tax under Section
4999, Executive shall, upon receipt from STERIS of an unconditional
written undertaking to indemnify and hold Executive harmless (on an
after tax basis) from any and all adverse consequences that might arise
from the contesting of that determination, cooperate with STERIS in that
contest at STERIS's sole expense. Nothing in this Paragraph (d) shall
require Executive to incur any expense other than expenses with respect
to which STERIS has paid to Executive sufficient sums so that after the
payment of the expense by Executive and taking into account the payment
by STERIS with respect to that expense and any and all taxes that may be
imposed upon Executive as a result of Executive's receipt of that
payment, the net effect is no cost to Executive. Nothing in this
Paragraph (d) shall require Executive to extend the statute of
limitations with respect to any item or issue in Executive's tax returns
other than, exclusively, the excise tax under Section 4999. If, as the
result of the contest of any assertion by the Internal Revenue Service
with respect to excise tax under Section 4999, Executive receives a
refund of a Section 4999 excise tax previously paid and/or any interest
with respect thereto, Executive shall promptly pay to STERIS such amount
as will leave Executive, net of the repayment and all tax effects, in
the same position, after all taxes and interest, that he would have been
in if the refunded excise tax had never been paid.
3. No Set-Off; No Obligation to Seek Other Employment or to Otherwise Mitigate
Damages; No effect Upon Other Plans. STERIS's obligation to make the payments
provided for in this
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Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense, or other claim
whatsoever that STERIS or any of its Subsidiaries may have against Executive.
Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise.
Except as provided in the last sentence of this Section 3, neither the amount of
any payment provided for under this Agreement nor Executive's right to any other
benefit under this Agreement shall be reduced by any compensation or benefits
earned by Executive as the result of employment by another employer or otherwise
after the termination of Executive's employment. Neither the provisions of this
Agreement, nor the execution of the waiver and release referred to in Subsection
4.2 below, nor the making of any payment provided for hereunder shall reduce any
amounts otherwise payable, or in any way diminish Executive's rights, under any
incentive compensation plan, stock option plan, retirement plan, disability or
insurance plan, or other similar contract, plan, or arrangement of STERIS,
except that the payment of a pro-rata incentive compensation benefit under
Subsection 1.4 shall satisfy, to the extent of that payment, any obligation
STERIS might have to Executive for payments under the MICP for the year in which
the Termination Date occurs. STERIS's obligation to provide continuing health,
dental, and/or life insurance coverage and benefits, as the case may be, shall
be discontinued before the time otherwise specified in Subsection 1.5 if, as,
and when Executive becomes eligible to receive roughly comparable health,
dental, and/or life insurance coverage and benefits, as the case may be, from a
subsequent employer.
4. Certain Limitations on Benefits.
4.1 Taxes; Withholding of Taxes. Without limiting either the right of
STERIS to withhold taxes pursuant to this Subsection 4.1 or the obligation of
STERIS to make gross-up payments pursuant to Subsection 2.4, Executive shall be
responsible for all income, excise, and other taxes (federal, state, city, or
other) imposed on or incurred by Executive as a result of receiving the payments
provided in this Agreement, including, without limitation, the payments provided
under Section 1 of this Agreement. STERIS may withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as STERIS shall
determine to be required pursuant to any law or government regulation or ruling.
4.2 Waiver and Release. STERIS may condition the payment of any amounts
otherwise due under Section 1 of this Agreement upon (a) the execution by
Executive of a waiver and release in the form attached to this Agreement as
Exhibit A, with blanks appropriately filled and, in the case of clause (e)
contained therein, completed with the number of days that STERIS determines is
required under applicable law, but in no event more than 45 days, and (b) the
observation of such waiting periods, if any, before and after execution of the
waiver and release by Executive as are required by law, such as, for example,
the waiting periods required for a waiver and release to be effective with
respect to claims under the Age Discrimination in Employment Act, provided that
STERIS delivers to Executive such a waiver and release, appropriately completed,
within seven days of the Termination Date.
5. Term of this Agreement. This Agreement shall be effective as of the Effective
Date and shall thereafter apply to any Change of Control occurring on or before
March 31, 2000. Unless this Agreement is terminated earlier pursuant to
Subsection 5.1, on March 31, 2000 and on March 31
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of each succeeding year thereafter (a "Renewal Date"), the term of this
Agreement shall be automatically extended for an additional year unless either
party has given notice to the other, at least one year in advance of that
Renewal Date, that the Agreement shall not apply to any Change of Control
occurring after that Renewal Date.
5.1 Termination of Agreement Upon Termination of Employment Before a
Change of Control. This Agreement shall automatically terminate and cease to be
of any further effect on the first date occurring before a Change of Control on
which Executive is no longer employed by STERIS, except that, for purposes of
this Agreement, any termination of employment of Executive that is effected both
(a) during the one year period ending on the date of a Change of Control and (b)
in contemplation of a Change of Control shall be deemed to be a termination of
Executive's employment as of immediately after that Change of Control becomes
irrevocable (as provided in Subsection 7.4) and Executive shall be entitled to
payments and benefits under this Agreement as if Executive's employment had
continued through the day after the Change of Control became irrevocable and had
then been terminated.
5.2 No Termination of Agreement During Two Year Period Beginning on
Date of a Change of Control. After a Change of Control, this Agreement may not
be terminated. However, if Executive's employment with STERIS continues for more
than two years following the occurrence of a Change of Control, then, for all
purposes of this Agreement other than Subsections 2.1 and 2.2, that particular
Change of Control shall thereafter be treated as if it never occurred.
6. Miscellaneous.
6.1 Successor to STERIS. STERIS shall not consolidate with or merge
into any other corporation, or transfer all or substantially all of its assets
to another corporation or other entity, unless such other corporation or other
entity shall assume this Agreement in a signed writing and deliver a copy
thereof to Executive. Upon such assumption the successor corporation or other
entity shall become obligated to perform the obligations of STERIS under this
Agreement and the term "STERIS" as used in this Agreement shall be deemed to
refer to such successor corporation or other entity.
6.2 Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered in person (to Executive in the
case of notices to Executive and to the Secretary of STERIS in the case of
notices to STERIS) or (b) on the date actually received when sent by United
States registered mail, return receipt requested, postage prepaid, and
addressed, in the case of notices to STERIS, as follows:
STERIS Corporation
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Attention: Secretary
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and, in the case of notices to Executive, properly addressed to Executive at
Executive's most recent home address as shown on the records of STERIS, or such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
6.3 Employment Rights. Nothing expressed or implied in this Agreement
shall create any right or duty on the part of STERIS or Executive to have
Executive continue as an officer of STERIS or to remain in the employment of
STERIS.
6.4 Administration. STERIS shall be responsible for the general
administration of this Agreement and for making payments under this Agreement.
All fees and expenses billed by the Accounting Firm for services contemplated
under this Agreement shall be the responsibility of STERIS.
6.5 Source of Payments. All payments under this Agreement shall be made
solely from the general assets of STERIS (or from a grantor trust, if any,
established by STERIS for purposes of making payments under this Agreement and
other similar agreements), and Executive shall have the rights of an unsecured
general creditor of STERIS with respect thereto.
6.6 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
6.7 Modification, Waiver, Etc. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or discharge
is agreed to in a writing signed by Executive and STERIS. No waiver by either
party hereto at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same time or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by either party that is not set forth
expressly in this Agreement. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal representatives, executors, administrators,
successors, heirs, and designees. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
7. Definitions.
7.1 Accounting Firm. The term "Accounting Firm" means the independent
auditors of STERIS for the Fiscal Year preceding the year in which the Change of
Control occurred and such firm's successor or successors; provided, however, if
such firm is unable or unwilling to serve and perform in the capacity
contemplated by this Agreement, STERIS shall select another national accounting
firm of recognized standing to serve and perform in that capacity under this
Agreement, except that such other accounting firm shall not be the then
independent auditors for STERIS or any of its affiliates (as defined in Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended).
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7.2 Base Salary. The term "Base Salary" means the salary payable to
Executive from time to time before any reduction for voluntary contributions to
any 401(k) plan or any other voluntary deferral. Base Salary does not include
imputed income from any payment by STERIS of any noncash benefits.
7.3 Cause. The employment of Executive by STERIS or any of its
Subsidiaries shall have been terminated for "Cause" if the Executive's
employment is terminated and, prior to that termination of employment, any of
the following has occurred:
(a) Executive shall have been convicted of a felony,
(b) Executive commits an act or series of acts of dishonesty in the
course of Executive's employment which are materially inimical to the
best interests of STERIS, all as determined in good faith by the vote of
three fourths of all of the members of the Board of Directors of STERIS
(other than Executive, if Executive is a Director of STERIS),
(c) after being notified in writing by the Board of Directors of STERIS
of the failure and having been given at least 30 days in which to cure
the failure, Executive continues to unreasonably neglect Executive's
duties and responsibilities as an executive of STERIS,
(d) after being notified in writing by the Board of Directors of STERIS
to cease any particular Competitive Activity, Executive intentionally
continues to engage in that Competitive Activity while Executive remains
in the employ of STERIS.
7.4 Change of Control. A "Change of Control" shall be deemed to have
occurred if at any time or from time to time while this Agreement is in effect:
(a) Any person (other than STERIS, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of STERIS, or any person
organized, appointed, or established by STERIS for or pursuant to the
terms of any such plan), alone or together with any of its affiliates,
becomes the beneficial owner of 15% or more (but less than 50%) of the
Common Shares then outstanding;
(b) Any person (other than STERIS, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of STERIS, or any person
organized, appointed, or established by STERIS for or pursuant to the
terms of any such plan), alone or together with any of its affiliates,
becomes the beneficial owner of 50% or more of the Common Shares then
outstanding;
(c) Any person commences or publicly announces an intention to commence
a tender offer or exchange offer the consummation of which would result
in the
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person becoming the beneficial owner of 15% or more of the Common Shares
then outstanding;
(d) At any time during any period of 24 consecutive months, individuals
who were directors at the beginning of the 24-month period no longer
constitute a majority of the members of the Board of Directors of
STERIS, unless the election, or the nomination for election by STERIS's
shareholders, of each director who was not a director at the beginning
of the period is approved by at least a majority of the directors who
(i) are in office at the time of the election or nomination and (ii)
were directors at the beginning of the period;
(e) A record date is established for determining shareholders entitled
to vote upon (i) a merger or consolidation of STERIS with another
corporation in which those persons who are shareholders of STERIS
immediately before the merger or consolidation are to receive or retain
less than 60% of the stock of the surviving or continuing corporation,
(ii) a sale or other disposition of all or substantially all of the
assets of STERIS, or (iii) the dissolution of STERIS;
(f) (i) STERIS is merged or consolidated with another corporation and
those persons who were shareholders of STERIS immediately before the
merger or consolidation receive or retain less than 60% of the stock of
the surviving or continuing corporation, (ii) there occurs a sale or
other disposition of all or substantially all of the assets of STERIS,
or (iii) STERIS is dissolved; or
(g) Any person who proposes to make a "control share acquisition" of
STERIS, within the meaning of Section 1701.01(Z) of the Ohio General
Corporation Law, submits or is required to submit an acquiring person
statement to STERIS.
Notwithstanding anything herein to the contrary, if an event described in clause
(b), clause (d), or clause (f) above occurs, the occurrence of that event will
constitute an irrevocable Change of Control. Furthermore, notwithstanding
anything herein to the contrary, if an event described in clause (c) occurs, and
the Board of Directors either approves such offer or takes no action with
respect to such offer, then the occurrence of that event will constitute an
irrevocable Change of Control. On the other hand, notwithstanding anything
herein to the contrary, if an event deserted in clause (a), clause (e), or
clause (g) above occurs, or if an event described in clause (c) occurs and the
Board of Directors does not either approve such offer or take no action with
respect to such offer as described in the preceding sentence, and a majority of
those members of the Board of Directors who were Directors prior to such event
determine, within the 90-day period beginning on the date such event occurs,
that the event should not be treated as a Change of Control, then, from and
after the date that determination is made, that event will be treated as not
having occurred. If no such determination is made, a Change of Control resulting
from any of the events described in the immediately preceding sentence will
constitute an irrevocable Change of Control on the 91st day after the occurrence
of the event.
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7.5 Competitive Activity. Executive shall be deemed to have engaged in
"Competitive Activity" if Executive engages, directly or indirectly and whether
as a director, officer, employee, agent, or independent contractor, in any
business or business activity in which STERIS or any of its Subsidiaries engages
(other than as a director, officer, or employee of STERIS or any of its
Subsidiaries).
7.6 Disability. For purposes of this Agreement, Executive's employment
will have been terminated by STERIS by reason of "Disability" of Executive only
if (a) as a result of bodily injury or sickness, Executive has been unable to
perform Executive's normal duties for STERIS for a period of 180 consecutive
days, and (b) Executive begins to receive payments under a long term disability
plan sponsored by STERIS not later than 30 days after the Termination Date.
7.7 Executive `s Average Annual Incentive Compensation. Subject to the
last four sentences of this Subsection 7.7, the term "Executive's Average Annual
Incentive Compensation" means the highest of:
(a) the average of the dollar amounts of incentive compensation paid or
payable to Executive under the MICP for each of the two Fiscal Years
most recently ended before the first Change of Control occurring after
execution of this Agreement,
(b) the average of the dollar amounts of incentive compensation paid or
payable to Executive under the MICP for each of the two Fiscal Years
most recently ended before the Termination Date, and
(c) the average dollar amount obtained by adding together (i) the amount
of incentive compensation paid or payable to Executive under the MICP
for the Fiscal Year most recently ended before the Termination Date and
(ii) Executive's Target Annual Incentive Compensation and dividing the
sum so obtained by two.
If Executive was not a participant in the MICP for any one or more of the Fiscal
Years referred to in this Subsection 7.7, the reference to that year shall be
ignored in determining the average under clause (a), (b), and/or (c) above, as
the case may be, and the "average," if any, determined under that clause shall
be the dollar amount of incentive compensation paid or payable to Executive
under the MICP for the other Fiscal Year referred to in that clause (or, in the
case of clause (c), the dollar amount of Executive's Target Annual Incentive
Compensation). Thus, for example, if Executive was not a participant in the MICP
for the second year preceding a Change of Control but was a participant in the
MICP for the year immediately preceding a Change of Control, the average
determined under clause (a) would be equal to the amount of incentive
compensation paid or payable to Executive under the MICP for the single year
immediately preceding the Change of Control. If Executive was a participant in
the MICP for only a part of one or more Fiscal Years referred to in this
Subsection 7.7, the dollar amount of incentive compensation paid or payable to
Executive under the
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MICP for that year, for purposes of determining the averages referred to in
clauses (a), (b), and/or (c), as the case may be, shall be annualized. Thus, for
example, if Executive was a participant in the MICP for only three months of a
particular Fiscal Year and was paid incentive compensation under the MICP for
that period equal to $3X, the annualized amount of $12X would be used in
determining the averages referred to in clauses (a), (b), and/or (c), as the
case may be.
7.8 Executives Target Annual Incentive Compensation. The term
"Executive's Target Annual Incentive Compensation" means the higher of(a) the
dollar amount that would have been payable to Executive under the MICP for the
Fiscal Year in which the Termination Date occurs had all relevant levels of
performance (whether corporate, personal, or other) been exactly at target
levels and had Executive remained in the employ of STERIS through the date on
which incentive compensation for that Fiscal Year was paid in full, or (b) the
dollar amount that would have been payable to Executive under the MICP for the
last Fiscal Year that ended before the occurrence of a Change of Control had all
relevant levels of performance for that Fiscal Year been exactly at target
levels.
7.9 Fiscal Year. The term "Fiscal Year" means STERIS's fiscal year as in
effect from time to time.
7.10 Mandatory Relocation. A "Mandatory Relocation" shall have occurred
if, at any time after a Change of Control, Executive is notified that
Executive's principal place of employment for STERIS is to be relocated, without
Executive's written consent, more than 50 miles from where Executive's principal
place of employment was located immediately before the Change of Control.
7.11 MICP. The term "MICP" means STERIS's Management Incentive
Compensation Plan as in effect for STERIS's 1998 Fiscal Year and any later year
and any similar plan that may be implemented in place of the plan from time to
time thereafter.
7.12 Reduction of Compensation. A "Reduction of Compensation" shall have
occurred if either or both of the following occur at any time after a Change of
Control:
(a) Executive's Base Salary is reduced or
(b) either
(i) the MICP, and/or Executive's level of participation in the
MICP, is altered for any year in such a way as to reduce
Executive's opportunity to earn incentive compensation under the
MICP for that year below the level of that opportunity as it
existed immediately before the Change of Control, or
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(ii) the amount of incentive compensation paid to Executive for
any period after the Change of Control is below Executive's
Target Annual Incentive Compensation.
7.13 Subsidiary. A "Subsidiary" means any corporation, partnership, or
other entity a majority of the voting control of which is directly or indirectly
owned or controlled at the time in question by STERIS.
7.14 Termination Date. The term "Termination Date" means the date on
which Executive's employment with STERIS terminates.
7.15 Window Period. The term "Window Period" with respect to any
particular Change of Control, means the three-month period beginning on the day
after the first anniversary of the Change of Control. For example, if a Change
of Control occurred on August 13, 1999, the Window Period with respect to that
Change of Control would begin on August 14, 2000 and end on November 13,2000. If
at any time there has been more than one Change of Control, there shall be a
separate Window Period with respect to each such Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx, III, Senior Vice
President and Chief Financial Officer
"EXECUTIVE"
/s/ Xxxx X. Xxxxxxx
----------------------------------------
XXXX X. XXXXXXX
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WAIVER AND RELEASE
DO NOT SIGN WITHOUT READING AND UNDERSTANDING
In consideration of the payments to be made to me following termination of my
employment with STERIS Corporation pursuant to the agreement between STERIS
Corporation and me dated__________ 1998 (the "Change of Control Agreement"),
which payments I acknowledge I am not entitled to receive without execution of
this Waiver and Release, and which payments will not commence earlier than
eight days after the execution of this Waiver and Release, I, ________, for
myself, my heirs, administrators, executors, and assigns, release and discharge
STERIS, its affiliates, subsidiaries, divisions, successors, and assigns and
the employees, officers, directors, and agents thereof (collectively referred
to throughout this Waiver and Release as "STERIS") from any and all claims
arising out of or relating to my employment with STERIS and my departure from
my employment with STERIS based upon or related to any contention (i) that my
employment terminated or ended because of any wrongful, unlawful, or improper
reason or in violation or breach of any express or implied contract or
agreement, or (ii) that STERIS engaged in any unlawful or discriminatory act,
event, pattern, or practice involving age, religion, sex, national origin,
ancestry, handicap, veteran status, race, or color, including without
limitation, the federal Age Discrimination in Employment Act, 29 U.S.C. Section
621 et seq., or any similar state law.
I warrant that no promise or inducement has been offered to me other than as set
forth in the Change of Control Agreement, that I am relying on no other
statement or representation by STERIS, and that I have not assigned any of my
rights. I have read this Waiver and Release; I have had a full opportunity to
consider it (including the opportunity to consult with an attorney of my
choice); and I understand that by signing it I am giving up important rights,
including any right to xxx under federal, state, or local law. I also verify
that my entering into this Waiver and Release is wholly voluntary.
I further warrant that:
(a) I understand that I am specifically waiving rights or claims under
the federal Age Discrimination in Employment Act, 29 U.S.C. Section 621
et seq.;
(b) I understand that I am not hereby waiving any rights or claims that
may arise after this Waiver and Release is executed by me;
(c) I understand that this Waiver and Release is being given by me in
exchange for consideration that is more valuable to me than what I am
entitled to without the Change of Control Agreement and the execution of
this Waiver and Release;
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(d) I have been advised in writing by STERIS that I should have, at my
expense, an attorney of my choice review this Waiver and Release;
(e) I have been advised by STERIS that I may take up to [twenty-one (21)
days OR forty-five (45) days AS STERIS MAY DETERMINE AND PROVIDE] from
receipt of this Waiver and Release to determine whether to execute the
same; and
(f) I have been advised by STERIS that this Waiver and Release may be
revoked by me within seven (7) days following execution of this Waiver
and Release whereupon this Waiver and Release shall be null and void.
IN WITNESS WHEREOF, I, ____________________, have hereby set my hand this
__________ day of _________________, ___.
Witnesses:
---------------------------------- ----------------------------------
----------------------------------
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ACKNOWLEDGMENT OF RECEIPT OF WAIVER AND RELEASE
I, _____________________, do hereby acknowledge that on ______________,
____, I received a copy of the Waiver and Release which is attached hereto, and
I understand that I have [twenty-one (21) days OR forty-five (45) days AS STERIS
MAY DETERMINE AND PROVIDE] from the date of receipt of the Waiver and Release to
determine whether to execute it.
Witness:
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17
Director of Human Resources
STERIS Corporation
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Re: Waiver and Release
------------------
Dear Sir or Madam:
On ________ , ____, I executed a Waiver and Release in favor of STERIS. More
than seven (7) days have elapsed since I executed the Waiver and Release. I have
at no time revoked my acceptance or execution of the Waiver and Release and,
accordingly, I hereby request that STERIS commence making the payments due to me
under my Change of Control Agreement.
Very truly yours,
--------------------------------
