AMENDMENT
THIS AMENDMENT to the Employment Agreement between MEDIQ Incorporated
(the "Company"), MEDIQ/PRN Life Support Services, Inc. ("MEDIQ/PRN") and Xxxxxx
Xxxxxxx (the "Executive"), dated as of April 27, 1995 (the "Original
Agreement"), is made by and between the Company, MEDIQ/PRN and the Executive as
of November 14, 1997.
BACKGROUND
The Board of Directors of the Company (the "Board") has initiated a
process to examine certain strategic alternatives designed to enhance the
Company's value to its stockholders. Executive is the President and Chief
Executive Officer of the Company and as such his active participation and
involvement in this process is crucial to its success. In addition, the Company
has determined that it is in its best interests to obtain the Executive's
agreement to forego, under certain circumstances, any payments to him under
Section 3.6(c) of the Original Agreement and also to extend the duration of his
covenant not to compete with the Company following termination of his
employment, and also to extend the term of the Agreement. In consideration of
the Success Bonus provided for herein, the Executive is willing to extend the
term of this agreement and the duration of his non-competition agreements, as
well as to forego any payments under Section 3.6(c), as and to the extent
provided herein. Subject to the foregoing, the Executive is also willing to
actively participate in the strategic process being undertaken by the Board.
The parties hereto therefore desire to amend the Original Agreement in
certain respects (which agreement, as amended hereby, is referred to as the
Employment Agreement).
NOW THEREFORE, in consideration of the premises and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Section 3.4 of the Original Agreement is hereby amended to read in
its entirety as follows:
3.4 Success Bonus.
(a) Executive has agreed to cooperate with the Board in analyzing
and pursuing various strategic alternatives, designed to enhance stockholder
value. If, before June 30, 1998, a Strategic Transaction (as hereafter defined)
occurs, Executive shall be entitled to receive a one-time bonus calculated as
provided in paragraph (b) below. For the purposes of this Agreement, a
- 1 -
"Strategic Transaction" means any sale or divestiture of MEDIQ or MEDIQ/PRN,
including (i) a sale of substantially all of its stock (including through
merger, tender, exchange or otherwise) or assets, in either case in one or more
related transactions, (ii) a Change in Control (as defined below) and (iii) any
sale or distribution of the stock of MEDIQ or MEDIQ/PRN which results in a
Change in Control at the time of such sale or distribution or at any time within
the immediately succeeding twelve (12) months. Executive's bonus shall be paid
in cash within 30 days after the consummation of a Strategic Transaction.
(b) Executive's bonus payable upon a Strategic Transaction shall
equal the sum of (i) .25% of the aggregate purchase price paid for MEDIQ or
MEDIQ/PRN up to a maximum aggregate purchase price of $375,000,000 plus (ii) if
the aggregate purchase price paid for MEDIQ or MEDIQ/PRN exceeds $375,000,000,
1.5% of any purchase price in excess of $375,000,000. For purposes of
calculating the bonus, the aggregate purchase price shall equal the sum of (x)
the total cash consideration paid (including, without limitation, in respect of
any warrants or other security of MEDIQ or MEDIQ/PRN), plus (y) the fair market
value of any securities or other property received as consideration (including,
without limitation, in respect of any warrants or other security of MEDIQ or
MEDIQ/PRN), plus (z) the aggregate amount (including, without limitation,
accrued but unpaid interest and the unpaid amount of any capital leases) of any
aggregate liabilities assumed or refinanced by the purchaser in connection with
the completion of the acquisition, other than current liabilities taken into
account in computing the working capital (except for current liabilities for
indebtedness for money borrowed (including accrued but unpaid interest or
capital leases)). The aggregate purchase price on which Executive's bonus is to
be calculated is hereafter called "Enterprise Value." In the event of any
dispute between Executive and MEDIQ regarding the Enterprise Value on which
Executive's bonus shall be calculated, the Directors and Executive shall select
an investment banking firm, reasonably acceptable to each of them, to make the
determination of the Enterprise Value. The fees and expenses of the investment
banking firm incurred in making such determination shall be borne by MEDIQ,
unless the investment banking firm shall determine that the Executive's position
regarding the calculation of Enterprise Value was unreasonable under the
circumstances, in which case such fees and expenses shall be shared equally
between MEDIQ and Executive.
(c) Executive acknowledges that a Strategic Transaction may not
occur, that the Board of Directors may determine not to pursue a Strategic
Transaction, that such a transaction can occur only upon proper authorization of
the Board of Directors, or a duly constituted committee thereof, and accordingly
there can be no assurance that any bonus will become payable to Executive under
this Section.
(d) [Omitted]
(e) For purposes of Section 3.4 of this Agreement a "Change in
Control" shall mean the earlier of such time as (i) the Xxxxx Group collectively
ceases to beneficially own more than 35% of the voting power held by all
stockholders of MEDIQ (or MEDIQ/PRN, as the case may be) or (ii) the Xxxxx Group
- 2 -
collectively ceases to beneficially own more than 50% of the voting power held
by all stockholders of MEDIQ (or MEDIQ/PRN, as the case may be) and none of
MEDIQ's securities are registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
2. Section 3.6(a) and the first four sentences of Section
3.6 (c)(ii) of the Original Agreement are hereby amended to read in their
entirety as follows:
"(a) If a Strategic Transaction occurs before June 30,
1998 and the Executive thereupon becomes entitled to a bonus
payment under Section 3.4(a) of this Employment Agreement, the
Executive shall forfeit all rights to any stock appreciation right
compensation granted pursuant to Section 3.6 of the Original
Agreement, and shall be entitled in lieu thereof solely to the
bonus payable under such Section 3.4(a) (and to the stock options
granted pursuant to Section 3.6(b) of the Original Agreement)."
* * * *
"(ii) Except as provided in clause (iv) below, upon
the termination of Executive's employment for any reason, Executive
shall, subject to Section 3.6(a), be entitled to be paid the value
of his SARs (granted pursuant to Section 3.6(c)(i)) in cash.
Payment of the value of Executive's SARs shall be made within 120
days of the termination of his employment. In addition, subject to
Section 3.6(a), Executive may, at his option, request payment of
the value of his SARs at the time of such request, in whole or in
part, on each fifth anniversary of the date of this Agreement and
such request(s) shall not result in cancellation of such SARs
("Payment Request"). The value of Executive's SARS to be paid to
him (or his estate) upon the termination of his employment (or any
earlier request) as provided above shall be the amount obtained by
solving the following formula:" (The remainder of Section
3.6(c)(ii) is not being amended hereby and shall continue in full
force and effect as provided in the Original Agreement)
3. Section 2.1 of the Original Agreement is hereby amended to read
in its entirety as follows:
The term of Executive's employment hereunder shall continue until
November 14, 1999 (the second anniversary of the date of the First
Amendment to the Original Agreement) and shall thereafter
automatically be renewed for successive two-year terms unless and
until either party shall give notice of his or its election to
terminate Executive's employment at least 60 days before the end of
the then current term, unless earlier terminated as provided herein
(the "Contract Period").
4. Section 5.2(a) of the Original Agreement is hereby amended to
provide that the period of time referred to in the third line of the first
sentence of such section shall be two years, instead of one year, as provided in
the Original Agreement.
- 3 -
5. Except as expressly modified herein, all other terms and
conditions set forth in the Original Agreement shall remain in full force and
effect. The parties may, but shall not be required to, execute a conformed
version of the Employment Agreement, incorporating the amendments to the
Original Agreement effect hereby. This Amendment may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement. Facsimile signatures shall be
treated as originals for all purposes hereunder.
6. This amendment has been duly authorized, executed and delivered
by each of the parties hereto in accordance with Section 6.6 of the Original
Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
14 day of November, 1997.
MEDIQ INCORPORATED
By: /s/ Xxx X. Xxxxxx
-----------------------------------
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By: /s/ Xxx X. Xxxxxx
-----------------------------------
/s/ Xxxxxx Xxxxxxx
-----------------------------------
