EXHIBIT 10.14
EMPLOYMENT AGREEMENT
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This Agreement is made as of the 3rd day of July, 1995 between Suburban
Ostomy Supply Co., Inc., a Massachusetts corporation (the "Company"), and
Stephen N. Aschettino, an individual residing at 48 Pelham Island Road, Sudbury,
Massachusetts 01776 (the "Employee").
RECITALS
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WHEREAS, pursuant to a Stock Purchase and Redemption Agreement dated as of
July 3, 1995 (the "Purchase Agreement"), Summit Ventures III, L.P., Summit
Investors II, L.P., Summit Subordinated Debt Fund, L.P. and The Bear Stearns
Companies, Inc. (collectively, the "Investors") have agreed to purchase an
aggregate of 66,500 shares of Series A Redeemable Preferred Stock, par value
$.01 per share, of the Company, 280 shares of Common Stock (before giving effect
to the stock dividend described in the Purchase Agreement), no par value per
share, of the Company and $6,750,000 in aggregate principal amount of 12%
Subordinated Debentures of the Company (collectively, the "Securities");
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company will
apply the proceeds received upon the sale of the Securities to redeem a portion
of the shares of Common Stock held by the Employee; and
WHEREAS, the Investors would be unwilling to purchase the Securities and the
Company would be unwilling to redeem and the Employee would be unwilling to
permit the redemption of the shares of Common Stock held by the Employee without
the execution of this Agreement by the Employee and the Company.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. The Company hereby employs the Employee as the Vice
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President, Chief Financial Officer, Treasurer and Clerk of the Company, and the
Employee accepts such employment for the term of employment specified in
Section 3 below (the "Employment Term"). During the Employment Term, the
Employee shall, subject to the direction of the President of the Company, be
responsible for all financial, treasury and accounting functions and procedures
of the Company, and shall perform such other duties, consistent with his
position as Vice President, Chief Financial Officer, Treasurer and Clerk of the
Company as may from time to time be reasonably assigned to him by the President
of the Corporation. The Employee shall not, however, be required to change his
principal residence or to spend extended periods of time away from his
principal residence without his consent, which consent may be withheld in his
sole and absolute discretion.
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2. Performance. The Employee agrees to devote his reasonable business
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efforts and substantially all of his business time to the performance of his
duties hereunder during the Employment Term.
3. Employment Term. The Employment Term shall begin on the date of this
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Agreement and continue until July 1, 2000 (the "Employment Term"), unless
earlier terminated in accordance with the terms of this Agreement. At the end
of the Employment Term, the period of employment will be automatically renewed
for a further twelve (12) month term, and subsequently renewed for twelve (12)
months periods upon each anniversary date thereof, unless written notice to the
contrary is given by either party to the other at least ninety (90) days before
the end of the Employment Term or any renewal thereof.
4. Compensation.
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(a) Salary. During the Employment Term, the Company shall pay the
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Employee a base salary, payable in equal monthly installments, subject to
withholding and other applicable taxes, at an annual rate of One Hundred Fifteen
Thousand Dollars ($115,000). The annual base salary shall be increased annually
on each July 1, during the Employment Term by an amount equal to the greater of
(i) such amount, if any, as the Compensation Committee of the Company shall
determine, and (ii) the percentage increase in the cost of living for the twelve
months ending immediately prior to such July 1, as reflected in the All Items
Consumer Price Index for all Urban Consumers for the Boston, MA Primary
Metropolitan Statistical Area as published by the United States Bureau of Labor
Statistics, multiplied by the annual base salary then in effect.
(b) Bonus. The Employee shall be eligible to participate in a bonus
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plan of the Company pursuant to which he may be entitled to receive an annual
bonus equal to a specified percentage of the annual base salary then in effect,
subject to achieving specified financial targets. The actual amount of such
bonus and the financial targets for the payment thereof shall be determined by
the Compensation Committee of the Board of Directors as it may from time to time
deem appropriate.
(c) Insurance; Other Benefits. The Employee shall be entitled to
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medical, retirement, life insurance and disability insurance not less favorable
to the Employee than those which he currently receives as an employee of the
Company. In addition, the Employee shall be entitled to participate in all
employee benefit plans now existing or hereinafter established by the Company,
including, but not limited to, medical plans, group life and disability
insurance plans, profit sharing or bonus plans, and any other employee benefit
plan or arrangement made available to executive officers of the Company, but
only to the extent such plans provide benefits greater than those currently
received by the Employee.
(d) Automobile. In recognition of the necessity of the use of an
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automobile for the efficient and expeditious performance of the Employee's
duties and obligations on behalf of
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the Company, the Company, at its cost, shall supply to the Employee for such use
an automobile of such make and model and upon such terms and conditions as the
Board shall determine from time to time. In addition, the Company shall pay for
the insurance and maintenance of such automobile.
(e) Vacation. The Employee shall be entitled to take four weeks of
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paid vacation during each year of the Employment Term, consistent with the
Company's past employment practices with regard to the Employee, to be taken at
such time or times during such year as shall be mutually convenient and
consistent with his duties and obligations to the Company. The Employee may not
accrue more than an aggregate of 50% vacation days, and such accrual may not be
for more than one year. The Employee shall also be entitled to all paid holidays
given by the Company to its personnel similarly situated.
5. Expenses. The Employee shall be reimbursed by the Company for all
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reasonable expenses incurred by him in connection with the performance of his
duties hereunder in accordance with policies established by the Board of
Directors from time to time and upon receipt of appropriate documentation.
6. Agreement Not to Compete. In consideration of the distributions
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payable to the Employee under the Purchase Agreement in connection with the
partial redemption of the shares of Common Stock held by him, the Employee
agrees that during the Non-Competition Period (defined below) he will not in any
capacity, either separately, jointly, or in association with others, directly or
indirectly, as an officer, director, consultant, agent, employee, owner,
partner, stockholder or otherwise, engage or have a financial interest in any
business which competes with the business of the Company of wholesale
distribution of health and medical products (as such business is modified from
time to time prior to any termination of employment) in the United States
(excepting only the ownership of not more than 5% of the outstanding securities
of any class listed on an exchange or regularly traded in the over-the-counter
market). The parties agree that the Employee may during the Non-Competition
Period work for a manufacturer of health and medical products. The "Non-
Competition Period" shall mean the longer of (i) the period during which the
Employee is employed pursuant to this Agreement and, to the extent applicable,
the following:
(a) Upon termination of the Employment Term or any renewal thereof:
twelve (12) months from such expiration.
(b) Upon termination by the Company with Cause: twenty-four (24)
months from such termination;
(c) Upon termination by the Company without Cause: so long as the
Company is making payments pursuant to the provisions of Section 9(b);
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(d) Upon termination by the Company on account of disability: twelve
(12) months from such termination;
(e) Upon termination by the Employee without Good Reason: twenty-four
(24) months from such termination; and
(f) Upon termination by the Employee with Good Reason: so long as the
Company is making payments pursuant to the provisions of Section 9(b).
The Employee further agrees that during the Non-Competition Period, except
in connection with the performance of services hereunder, he will not in any
capacity, either separately, jointly or in association with others, directly or
indirectly, hire or solicit for hire any person who was an employee of the
Company at any time during the two years immediately preceding termination of
employment hereunder.
If a court determines that the foregoing restrictions are too broad or
otherwise unreasonable under applicable law, including with respect to time or
space, the court is hereby requested and authorized by the parties hereto to
revise the foregoing restrictions to include the maximum restrictions allowed
under the applicable law. The Employee expressly agrees that breach of the
foregoing would result in irreparable injuries to the Company, that the remedy
at law for any such breach will be inadequate and that upon breach of this
provision, the Company, in addition to all other available remedies, shall be
entitled as a matter of right to injunctive relief in any court of competent
jurisdiction without the necessity of proving the actual damage to the Company.
7. Secret Processes and Confidential Information. For the Employment Term
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and thereafter, (a) the Employee will not divulge (except as legally compelled
by court order, and then only to the extent required, after prompt notice to the
Company of any such order), directly or indirectly, other than in the regular
and proper course of business of the Company, any Confidential Information (as
defined below) and (b) the Employee will not use, directly or indirectly, any
Confidential Information for the benefit of anyone other than the Company. For
purposes of this Agreement, "Confidential Information" means any information
which is proprietary or unique to the Company, including information with
respect to the operations or finances of the Company or with respect to
confidential or secret processes, techniques, machinery, customers, plans or
products manufactured or sold by the Company. Notwithstanding the foregoing,
Confidential Information shall not include information (i) that is of public
knowledge at the time of disclosure to Employee, (ii) that becomes generally
available to the public other than as a result of disclosure by Employee,
(iii) that is rightfully received by the Employee from a third party on a
nonconfidential basis, or (iv) that is unrelated to the products then being
developed, manufactured or sold by the Company and is developed by Employee
independently and is not derived from Confidential Information. All new
processes, techniques, know-how, inventions, plans, products, patents and
devices (collectively, "Developments") developed, made or invented by the
Employee, alone or with others, while an
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employee of the Company, shall be and become the sole property of the Company,
unless released in writing by the Company or unless such Developments do not
result from tasks assigned to the Employee by the Company and do not relate to
the business of the Company or any of its products or services, and the Employee
hereby assigns any and all rights therein or thereto to the Company.
8. Termination.
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(a) Termination at End of Term. The employment of the Employee
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hereunder shall automatically renew at the end of the Employment Term, unless
terminated in accordance with the provisions of Section 3 or unless the parties
hereto mutually agree otherwise in writing at least sixty (60) days prior to
expiration of the Employment Term, or the Agreement is earlier terminated by the
Company or the Employee pursuant to this Section 8.
(b) Termination by the Company With Cause. The Company shall have
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the right, subject to the provisions hereinafter set forth, at any time to
terminate the Employee's employment hereunder upon the occurrence of any of the
following (any such termination being referred to as a termination for "Cause"):
(i) the commission by the Employee of any embezzlement or other
deliberate act of dishonesty against the financial or business
interests of the Company;
(ii) the habitual drug addiction or intoxication of the Employee;
(iii) the conviction by the Employee of or the pleading by the
Employee of nolo contendere to, a felony or breach of fiduciary trust
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for the purpose of gaining a personal profit;
(iv) the willful or intentional failure or refusal of the Employee
to perform the duties specified in and pursuant to Section 1 hereof or
to follow reasonable directives of the Board of Directors of the
Company which failure or refusal is not cured within thirty (30) days
following Employee's receipt of notice from the Company specifying in
reasonable detail such failure or refusal;
(v) the breach by the Employee of any material term of this
Agreement which breach is not cured within thirty (30) days following
Employee's receipt of notice from the Company specifying in reasonable
detail such breach.
(c) Termination Upon Death or Disability. The Employee's
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employment hereunder shall automatically terminate upon the Employee's death or
upon his inability to have performed his duties hereunder by reason of any
mental, physical or other disability for a period of at least six consecutive
months, as determined by a qualified physician chosen by the Board of
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Directors of the Company and reasonably acceptable to the Employee or his legal
representatives.
(d) Termination by the Company Without Cause. The Company shall
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have the right to terminate the Employee's employment at any time for any reason
without Cause.
(e) Termination for Good Reason. The Employee shall have the right
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to terminate his employment with the Company for "Good Reason" upon written
notice to the Company. The Employee's termination for Good Reason hereunder
shall be treated for purposes of this Agreement, including without limitation
Section 6 and 9(b), as if the Employee were terminated without Cause pursuant to
Section 8(d) above. For purposes of this Agreement, "Good Reason" shall mean:
(i) without the Employee's consent, the assignment to him during the Employment
Term of any material duties or responsibilities substantially inconsistent with
his position and duties and responsibilities with the Company as set forth
herein, or a material change in his reporting responsibilities, titles or
authority as set forth herein, which assignment, change or inconsistency is not
cured by the Company within thirty (30) days following its receipt of notice
from the Employee specifying in reasonable detail such assignment, change or
inconsistency; or (ii) the Company's breach of any material terms of this
Agreement, which breach is not cured by the Company within thirty (30) days
following its receipt of notice from the Employee specifying in reasonable
detail the breach.
9. Effect of Termination of Employment.
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(a) Upon Expiration of Employment Term. If the Employee's employment
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terminates upon expiration of the Employment Term or any renewal thereof upon
notice given in accordance with Section 3, the Employee will receive salary,
bonus and vacation accrued through the date of termination, but shall be
entitled to no further benefits hereunder.
(b) With Cause; Resignation Without Good Reason. If the Employee's
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employment is terminated with Cause pursuant to Section 8(b) or if the Employee
elects to terminate his employment other than pursuant to Section 8(e), the
Employee's salary, bonus and other benefits specified in Section 4 shall cease
at the time of such termination. The Employee shall be entitled only to receive
accrued salary and vacation through the date of termination, but shall be
entitled to no further benefits hereunder.
(c) Without Cause by the Company. If the Employee's employment is
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terminated by the Company without Cause pursuant to Section 8(d) including for
such purposes termination by the Employee for Good Reason pursuant to
Section 8(e), the Employee's salary, bonus and other benefits specified in
Sections 4 shall cease at the time of such termination, and the Employee shall
be entitled to receive (i) his base salary then payable under Section 4(a)
above, subject, however, to the C.P.I. adjustment therein provided for
subsequent payments ("Salary Payment") for a period of twelve (12) months
following termination; provided, however that if such termination occurs during
the first year of the Employment Term such Salary
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Payment shall continue for the balance of such first year and for the twelve
months commencing upon expiration of such first year; and provided further,
however, that the Company may, at its option, extend for up to twelve (12)
months the period during which Salary Payments are otherwise required to be
made; (ii) accrued salary and vacation through the date of termination;
(iii) continuation at the Company's expense of comparable medical benefits
during the period during which Salary Payments are made; and (iv) payment of
such pro rata bonus, if any, as was earned in the year in which termination
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occurred. The term "pro rata bonus" shall mean the bonus which the Employee
would have received had he remained employee for the entire year in which his
employment was terminated (calculated on an annualized basis on results of
operations as of the end of the month immediately preceding his termination,
without taking into account results of operations after the end of such month)
times a fraction, the numerator of which is the number of days the Employee
was employed in the year of termination, and the denominator of which is 365.
Any pro rata bonus earned will be paid when other bonuses are paid for the
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year in which termination occurs. The Employee shall not be required to
mitigate the amount of any Salary Payment provided for in this Section 9(b) by
seeking other employment or otherwise. The Salary Payment (as previously
described in this Section 9(b)) shall be the Employee's sole and exclusive
severance payment and remedy at law or in equity for termination of employment
hereunder by the Company without Cause or by Employee for Good Reason.
(d) Medical Benefits. Notwithstanding the foregoing, in the case of
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any termination of employment of the Employee, the Employee shall be entitled to
continue to participate in the Company's medical benefit plans to the extent
required by law.
10. Insurance. The Company may purchase insurance on the life of the
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Employee, and if it does so, the Employee shall cooperate fully by performing
all the requirements of the life insurer which are necessary conditions
precedent to the issuance of the life insurance policy issued by it.
11. Notice. Any notices required or permitted hereunder shall be in
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writing and shall be deemed to have been given when personally delivered or when
mailed, certified or registered mail, postage prepaid, to the following
addresses or such other address as to which notice is given in the manner
provided herein:
If to the Employee:
Donald H. Benovitz
One Everett Terrace
South Natick, Massachusetts 01776
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If to the Company:
Suburban Ostomy Supply Co., Inc.
75 October Hill Road
Holliston, MA 01746
Attention: President
With copies to:
Summit Partners III, L.P.
One Boston Place
Boston, MA 02108
Attn: Joseph F. Trustey;
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Attn: James Westra; and
Sullivan & Worcester
One Post Office Square
Boston, MA 02109
Attn: Norman A. Bikales
12. General.
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(a) Governing Law. The terms of this Agreement shall be governed by
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and construed under the laws of The Commonwealth of Massachusetts without regard
to its principles of conflicts of laws.
(b) Assignability. The Employee may not assign his interest in or
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delegate his duties under this Agreement. Except in the case of a sale of all
or substantially all of the stock or assets of the Company, the Company may not
assign the Agreement or the rights and obligations hereunder without consent of
Employee.
(c) Enforcement Costs. In the event that either the Company or the
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Employee initiates an action or claim to enforce any provision or term of this
Agreement, the costs and expenses (including reasonable attorney's fees and
expenses) of the prevailing party shall be paid by the other party, such party
to be deemed to have prevailed if such action or claim is concluded
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pursuant to a court order or final judgment which is not subject to appeal, a
settlement agreement or dismissal of the principle claims.
(d) Binding Effect. This Agreement shall be binding upon and inure
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to the benefit of the Company, its permitted successors and assigns and the
Employee, his representatives and heirs.
(e) Entire Agreement; Modification. This Agreement constitutes the
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entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. Notwithstanding the term of employment hereunder, this
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Agreement shall continue for so long as any obligations remain under this
Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement the day and year first written above.
SUBURBAN OSTOMY SUPPLY CO., INC.
By: /s/ Herbert Grey
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Name:
Title:
EMPLOYEE
/s/ Donald H. Benovitz
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Donald H. Benovitz
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