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Exhibit 10.10
EMPLOYMENT AGREEMENT
This Agreement, dated____________ , by and between MEDEX, INC., an Ohio
corporation (the "Company"), and (the "Employee").
RECITALS
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A. Employee is an executive of the Company, or one of its principal
subsidiaries, with significant policy-making and operational responsibilities in
the conduct of its business.
B. The Company recognizes that Employee is a valuable resource for the
Company and the Company desires to be assured of the continued services of
Employee.
C. The Company is concerned that upon a possible or threatened change in
control, Employee may have concerns about the continuation of his employment
and/or his status and responsibilities and may be approached by others with
employment opportunities, and desires to provide Employee some assurance as to
the continuation of his employment status and responsibilities on a basis
consistent with that which he has earned in the event of such possible or
threatened change in control.
D. The Company desires to assure that if a possible change of control
situation should arise and Employee should be involved in deliberations or
negotiations in connection therewith that Employee would be in a secure position
to consider and/or negotiate such transaction as objectively as possible and to
this
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end desire to protect Employee from any direct or implied threat to his
financial well-being.
E. The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve as such but desires assurance
that in the event of such a change in control he will continue to have the
responsibility and status he has earned.
AGREEMENTS
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The parties do hereby agree as follows:
1. CHANGE IN CONTROL. The provisions of Section 2 and 3 of this Agreement
shall become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control of the Company"
shall mean:
(a) A change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"); provided
that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting
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power of the Company's then outstanding securities, or
(b) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director
was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period, or
(c) The Company shall have merged into or consolidated
with another corporation, or merged another corporation into
the Company, on a basis whereby less than 50% of the total
voting power of the surviving corporation is represented by
shares held by former shareholders of the Company prior to
such merger or consolidation, or
(d) The Company shall have sold substantially all of
its assets to another corporation or other entity or person.
(e) Provided further, however, that any of the events
described in subparagraphs (a), (b), (c) or (d) above shall
not cause Sections 2 and 3 of this Agreement to become
operative and there shall be no change of control if the
event described in
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subparagraphs (a), (b), (c) or (d) is approved at any time
before consummation of the event by a two-thirds (2/3) vote
of the total membership of the Board of Directors of the
Company and a majority of the continuing directors (as
hereinafter defined) of the Company at the time of said
vote. The term continuing directors shall mean those members
of the Board of Directors of the Company elected by the
shareholders or otherwise appointed prior to the occurrence
of any of the events described in subparagraphs (a), (b),
(c) or (d) above.
2. TERMINATION WITHIN ONE YEAR. In the event that the employment of
Employee with the Company is terminated involuntarily within one year after a
change in control occurs:
(a) Employee shall be entitled to receive an amount of
cash equal to two (2) times his annual salary at his then
current rate. Such amount shall be paid in equal monthly
installments over a period of 24 months, the first such
installment to be paid within ten (10) days after
termination.
(b) Employee shall be entitled to receive a lump sum
amount of cash equal to two (2) times the amount that was
awarded to him in the previous fiscal year immediately prior
to such a change in control under the Incentive Compensation
Plan of the Company, regardless of whether such Plan may
have
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been changed or terminated after such change in control.
Such amount shall be paid at the same time as awards are
paid to other participants in said Plan if such Plan shall
have been continued but in no event later than the first
January 31 following termination or resignation.
(c) Employee shall continue for a period of 24 months
to be covered at the expense of the Company by the same or
equivalent hospital, medical, accident, disability and life
insurance coverages as he was covered by immediately prior
to termination of his employment; provided, however, that
the Employee may elect to be paid in cash within 30 days
after termination of his employment an amount equal to the
Company's cost of providing such coverages during such
period.
(d) Within 30 days thereafter, the Company shall pay to
Employee in a lump sum an amount of cash, net of all
federal, state and local income taxes, which shall be
sufficient to enable Employee to purchase a paid-up annuity
issuable by a financially sound and reputable insurance
company providing for payment beginning at age 65 of a
monthly benefit equal to that which Employee would have
received under the Company's profit sharing plan as in
effect immediately prior to such change
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in control (with all payment options as provided for in such
plan) had all of the benefits credited to his account under
said profit sharing plan to the date of termination of his
employment been fully vested. Notwithstanding the foregoing,
if at the time of his termination Employee is fully vested
under the Company's profit sharing plan, then Employee shall
receive the benefits he is entitled to under, and pursuant
to the terms of, such profit sharing plan and the preceding
sentence shall be inapplicable.
3. RESIGNATION WITHIN ONE YEAR. In the event that Employee should determine
in good faith that his status or responsibilities with the Company has or have
diminished subsequent to a change in control, and shall for that reason resign
from his employment with the Company within one year after such change in
control, Employee shall be entitled to receive all of the payments and enjoy all
of the benefits specified in Section 2 hereof.
4. ARRANGEMENTS NOT EXCLUSIVE. The specific arrangements referred to above
are not intended to exclude Employee's participation in other benefits available
to executive personnel generally or to preclude other compensation or benefits
as may be authorized by the Board of Directors of the Company at any time.
5. ENFORCEMENT COSTS. The Company is aware that upon the occurrence of a
change in control the Board of Directors or a
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stockholder of the Company may then cause or attempt to cause the Company to
refuse to comply with its obligations under this Agreement, or may cause or
attempt to cause the Company to institute, or may institute, litigation seeking
to have this Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Employee the benefits intended under the Agreement. In
these circumstances, the purpose of this Agreement could be frustrated. It is
the intent of the Company that Employee not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Employee hereunder, nor be
bound to negotiate any settlement of his rights hereunder under threat of
incurring such expenses. Accordingly, if following a change in control it should
appear to Employee that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or to
recover from Employee the benefits intended to be provided to Employee
hereunder, and that Employee has complied with all of his obligations under this
Agreement, the Company irrevocably authorizes Employee from time to time to
retain counsel of his choice at the expense of the Company as provided in this
Section 5, to represent Employee in connection with the initiation or defense of
any litigation or
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other legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to Employee entering
into an attorney-client relationship with such counsel, and in that connection
the Company and Employee agree that a confidential relationship shall exist
between Employee and such counsel. The reasonable fees and expenses of counsel
selected from time to time by Employee as hereinabove provided shall be paid or
reimbursed to Employee by the Company on a regular, periodic basis upon
presentation by Employee of a statement or statements prepared by such counsel
in accordance with its customary practices, up to a maximum aggregate amount of
$500,000.
6. LETTER OF CREDIT. In order to ensure the benefits intended to be
provided to Employee under this Agreement without Employee incurring the cost
and expense of such litigation, the Company will immediately upon a change in
control, as defined in Section 1 herein, establish an irrevocable standby Letter
of Credit in favor of Employee and each of the other employees executing forms
of this Agreement, such Letter of Credit to be drawn on such bank with assets of
not less than $1.5 billion and capital of not less than $100 million as the
Chief Executive Officer of the Company shall, in his sole discretion select (the
"Letter of Credit") and shall provide that the credit amount of $500,000 will be
available against which Employee and each of the other employees
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executing forms of this Agreement may draw for payment of any legal costs of the
type provided for in Section 5 which have not been paid by the Company when due.
Subject to the provisions hereof, the Letter of Credit shall contain and be on
such terms and conditions as to require the issuing bank to pay Employee on
presentation by Employee of a statement signed by Employee or his legal
representative setting forth (a) the amounts of the payments owing to Employee
under Section 5 which are then due and payable, and (b) a statement that such
amounts were not paid by the Company when due. The Company shall pay all fees
required to maintain the Letter of Credit in effect for three years from the
date of any change in control, as defined in Section 1 herein. If the Company
shall fail to pay such fees, Employee may as provided above draw upon the Letter
of Credit for the same and pay such fees with the amount so drawn. Each time
Employee draws under the Letter of Credit, Employee shall provide to the Company
a copy of such draft and of the statement of his counsel referred to in Section
5.
7. NO SET-OFF. The Company shall not be entitled to set off against the
amounts payable to Employee any amounts earned by Employee in other employment
after termination of his employment with the Company, or any amounts which might
have been earned by Employee in other employment had he sought such other
employment. Employee shall not be required to mitigate the amount of any payment
provided for herein by seeking other employment. The amounts payable to Employee
under this Agreement shall not be treated as damages but as severance
compensation to which Employee
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is entitled by reason of termination of his employment in the circumstances
contemplated by this Agreement.
8. TERMINATION. This Agreement has no specific term, but shall terminate
if, prior to a change in control of the Company, the employment of Employee with
the Company shall terminate.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and insure
to the benefit of the Company and its successors and assigns, and shall be
binding upon and inure to the benefit of Employee and his legal representatives,
heirs, and assigns.
10. SEVERABILITY. In the event that any Section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraph, clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest extent permitted by law.
11. LIMITATIONS ON TERMINATION COMPENSATION.
(a) The present value (as defined herein) of any
Severance Benefits payable to you under this Agreement, and
any other payments otherwise payable to you by the Company
on or after a Change in Control, which are deemed under
Section 280G of the
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Internal Revenue Code of 1954, as amended (the "Code"), to
constitute "parachute payments" (as defined in Section 280G
without regard to Section 280G(b)(2)(A)(ii), shall be less
than three times your base amount (as defined herein). In
the event that the present value of such payments equals or
exceeds such amount, the provisions set forth below will
apply, and Severance Benefits payable to you under this
Agreement will be made only in accordance with this Section
11, notwithstanding any provision to the contrary in this
Agreement.
(b) Not later than thirty (30) days from the date of
termination, the Company will provide you with a schedule
indicating by category the present value of all Severance
Benefits payable to you under this Agreement (specifying the
paragraph under which each such payment is to be made) and
any other payments otherwise payable to you by the Company
on or after the Change in Control, which, in the Company's
opinion, constitute parachute payments under Section 280G.
No payments under this Agreement shall be made until after
thirty (30) days from the receipt of such schedule by you.
At any time prior to the expiration of said 30-day period,
you shall have the right to select from all or part of any
category of payment to be made under this
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Agreement those payments to be made to you in an amount the
present value of which (when combined with the present value
of any other payments otherwise payable to you by the
Company that are deemed parachute payments) is less than
300% of your base amount. If you fail to exercise your right
to make a selection, only a lump-sum cash severance payment
in the maximum amount that is less than 300% of your base
amount (reduced by the present value of any other payments
otherwise payable to you by the Company that are deemed
parachute payments) shall be made to you on the day after
the expiration of the period extending thirty (30) days from
the receipt by you of the schedule provided for hereunder,
and no other Severance Benefits under this Agreement shall
be paid to you under any circumstances.
(c) At any time prior to exercising your right to make
a selection under paragraph (b) of this Section 11, you
shall have the right to request that the Company obtain a
ruling from the Internal Revenue Service ("Service") as to
whether any or all payments listed on the schedule provided
hereunder are, in the view of the Service, parachute
payments under Section 280G. If a ruling is sought pursuant
to your request, no Severance Benefit under this
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Agreement shall be paid to you until after fifteen (15) days
from the date of such ruling, and the period during which
you may exercise your right to make a selection under
paragraph (b) hereof shall be extended to a date fifteen
(15) days from the date of such ruling. For purposes of this
Section 11, you and the Company hereby agree to be bound by
the Service's ruling as to whether payments constitute
parachute payments under Section 280G. If the Service
declines, for any reason, to provide the ruling requested, a
certified public accountant, chosen by Employee shall make a
determination with respect to what payments constitute
parachute payments, and the period during which you may
exercise your right to make a selection under paragraph (b)
hereof shall be extended to a date forty-five (45) days from
the date of the Service's notice indicating that no ruling
will be forthcoming.
(d) For purposes of this Section 11, present value
means the value determined in accordance with the principles
of Section 1274(b)(2) of the Code under rules provided in
Treasury Regulations under Section 280G of the Code, and
base amount means the average annual compensation payable to
you by the Company and includible in your gross income for
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Federal income tax purposes during the shorter of the period
consisting of the most recent five (5) taxable years ending
before the date of any change of control of the Company or
the portion of such period during which you were an
employee.
(e) Any selection by you under this Section 11 of
Severance Benefit payments shall be invalid, and no such
payments will be made, unless, under relevant Treasury
Regulations, such payments can be reduced to present value
as of the date of termination or such appropriate date prior
thereto as provided in said regulations.
(f) Reference to Code Section 280G herein are specific
references to Section 280G as added to the Code by the Tax
Reform Act of 1984. To the extent that Code Section 280G is
amended prior to expiration or termination of this
Agreement, or replaced by a successor statute, the
limitations imposed by this Section 11 upon payments to be
made to you under this Agreement shall be deemed modified
without further action of the parties so as to provide only
for such limitations that are consistent with such
amendment(s) or successor statutes, as the case may be. In
the event that Section 280G, or any successor statute, is
repealed, this Section 11 shall cease to be effective on the
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effective date of such repeal. The parties to this Agreement
recognize that final Treasury Regulations under Code Section
280G may affect the amounts that may be paid hereunder and
agree that, upon issuance of such final Regulations, this
Agreement may be modified as in good faith deemed necessary
in light of the provisions of such Regulations to achieve
the purposes hereof, and that consent to such
modification(s) shall not be unreasonably withheld.
IN WITNESS WHEREOF, this Agreement has been executed on __________________
______, 19___.
MEDEX, INC.
By____________________________
Its___________________________
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Employee
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