<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 31, 1999
-----------------
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____________ to _______________.
Commission File Number
0-18208
---------------
MAXXIM MEDICAL, INC.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 76-0291634
- ------------------------------------- ----------------------------------------
State or other jurisdiction of (I.R.S. Employee Identification No.)
incorporation or organization)
10300 49TH STREET NORTH, CLEARWATER, FLORIDA 33762
- ---------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code........ (727) 561-2100
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No_________
--------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock:
Class Outstanding at March 11, 1999
- --------------------------------- -------------------------------------
Common Stock, $.001 par value 14,275,742
<PAGE>
MAXXIM MEDICAL, INC.
INDEX
-----
<TABLE>
<CAPTION>
PART I. Financial Information Page No.
--------------------- --------
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheets as of
January 31, 1999 and November 1, 1998 2
Condensed Consolidated Statements of Operations
for the Three Months Ended January 31, 1999
and February 1, 1998 3
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended January 31, 1999 and
February 1, 1998 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. Other Information
-----------------
Item 6. Exhibits and Reports 13
Signatures 15
- ----------
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
January 31, November 1,
1999 1998
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,967 $ 4,125
Accounts receivable, net of allowances of $1,932 and $1,840, respectively 93,678 70,429
Inventory, net 119,774 79,648
Deferred tax assets 17,105 10,325
Prepaid expenses and other 11,113 8,690
------------- -------------
Total current assets 248,637 173,217
Property and equipment 226,723 169,048
Less: accumulated depreciation ( 43,890) ( 41,538)
------------- -------------
182,833 127,510
Goodwill, net 274,819 147,016
Other assets, net 39,234 20,308
------------- -------------
Total assets $ 745,523 $ 468,051
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 20,000 $ -
Current maturities of other long-term obligations 2,618 2,544
Accounts payable 38,446 35,834
Accrued liabilities 70,299 25,921
------------- -------------
Total current liabilities 131,363 64,299
Long-term debt, net of current maturities 219,000 13,800
10 1/2% Senior subordinated notes 100,000 100,000
Other long-term obligations, net of current maturities 7,424 5,339
Deferred tax liabilities 12,405 11,704
------------- -------------
Total liabilities 470,192 195,142
Commitments and contingencies
Shareholders' equity
Preferred Stock, $1.00 par, 20,000,000 shares authorized, none issued or
outstanding - -
Common Stock, $.001 par, 40,000,000 shares authorized, 14,264,722
and 14,238,822 shares issued and outstanding, respectively 14 14
Additional paid-in capital 219,406 219,268
Retained earnings 68,762 64,886
Subscriptions receivable (5,200) (5,200)
Accumulated other comprehensive income (7,651) (6,059)
------------- -------------
Total shareholders' equity 275,331 272,909
------------- -------------
Total liabilities and shareholders' equity $ 745,523 $ 468,051
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
January 31, February 1,
1999 1998
------------- -------------
<S> <C> <C>
Net sales $ 136,126 $ 128,003
Cost of sales 94,565 94,942
------------- -------------
Gross profit 41,561 33,061
Selling, general and administrative expenses 27,079 22,334
Transition expenses 3,371 -
------------- -------------
Income from operations 11,111 10,727
Interest expense (4,297) (4,330)
Other income, net 5 161
------------- -------------
Income before income taxes 6,819 6,558
Income taxes 2,943 2,807
------------- -------------
Net income $ 3,876 $ 3,751
============= =============
Basic earnings per share $ 0.27 $ 0.38
============= =============
Diluted earnings per share $ 0.26 $ 0.37
============= =============
Basic weighted average shares outstanding 14,252 9,793
============= =============
Diluted weighted average shares outstanding 14,677 10,492
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, In thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
January 31, February 1,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,876 $ 3,751
Adjustment to reconcile net income to net cash provided by
operating activities:
(Increase) decrease in deferred income tax expense (26) 789
Depreciation and amortization 6,053 4,630
Gain on sale of building (167) -
Change in operating assets and liabilities (365) 1,908
---------- ----------
Net cash provided by operations 9,371 11,078
Cash flows from investing activities:
Proceeds from sale of product line 1,180 -
Proceeds from sale of building 331 -
Purchase of Circon, net of cash acquired (218,933) -
Purchase of property and equipment (8,641) (2,324)
---------- ----------
Net cash used in investing activities (226,063) (2,324)
Cash flows from financing activities:
Increase in long-term borrowings 200,000 -
Payments on long-term borrowings - (3,000)
Net borrowings (payments) on revolving line of credit 25,200 (9,530)
Decrease in other obligations (1,649) (1,338)
Payment of debt financing costs (5,584) -
Increase in bank overdraft 1,323 5,513
Other, net 390 (64)
---------- ----------
Net cash provided by (used in) financing activities 219,680 (8,419)
Effect of foreign currency translation adjustment (146) (143)
---------- ----------
Net increase in cash and cash equivalents 2,842 192
Cash and cash equivalents at beginning of period 4,125 3,130
---------- ----------
Cash and cash equivalents at end of period $ 6,967 $ 3,322
========== ==========
Supplemental cash flow disclosures:
Interest paid during the period $ 247 $ 2,026
Income taxes paid during the period 2,487 826
Conversion of 6 3/4% convertible subordinated debentures - 22,278
Noncash investing and financing activities
Note receivable from sale of product line $ 2,000 -
Note receivable from sale of building sale 200 -
Net change in unrealized gain on available for sale securities 791 -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Maxxim Medical, Inc. and its wholly owned subsidiaries
(collectively, the Company). The Company develops, manufactures and markets
specialty hospital products.
The accompanying unaudited condensed consolidated financial statements
reflect all adjustments of a normal recurring nature which, in the opinion of
management, are necessary for a fair presentation of the results for the interim
periods presented. All significant intercompany balances and transactions have
been eliminated in consolidation.
These financial statements should be read in conjunction with the Company's
annual audited financial statements for the year ended November 1, 1998,
included in the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
Certain reclassifications have been made to the fiscal 1998 condensed
consolidated financial statements to conform with the fiscal 1999 presentation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company has a fiscal year which ends on the Sunday nearest to the end
of the month of October. Normally each fiscal year will consist of 52 weeks,
but every five or six years, the fiscal year will consist of 53 weeks. For
fiscal 1999, the year end date will be October 31st compared to a 1998 year end
date of November 1st. Fiscal 1999 will consist of 52 weeks. The first quarter
of fiscal 1999 ended on January 31st compared to the fiscal 1998 first quarter
end date of February 1st.
TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS
Assets and liabilities of foreign subsidiaries have been translated into
United States dollars at the applicable rates of exchange in effect at the end
of the period reported. Revenues and expenses have been translated at the
applicable weighted average rates of exchange in effect during the period
reported. Translation adjustments are reflected in accumulated other
comprehensive income as a separate component of shareholders' equity.
EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128, "Earnings per
Share"(SFAS No. 128), specifies new measurement, presentation and disclosure
requirements for earnings per share and is required to be applied retroactively
upon initial adoption. The Company has adopted SFAS No. 128 effective with the
release of February 1, 1998 earnings data. Basic earnings per share is based on
the weighted average shares outstanding without any dilutive effects considered.
Diluted earnings per share reflects dilution from all contingently issuable
shares, including options and convertible debt. A reconciliation of such
earnings per share data is as follows:
5 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended January 31, 1999
-------------------------------------
(unaudited)
Per Share
Income Shares Amounts
-------- ---------- -------------
<S> <C> <C> <C>
Basic EPS
Net Income................................ $3,876 14,252 $ 0.27
======
Effect of dilutive securities:
Options................................. 425
------ -------
Diluted EPS............................... $3,876 14,677 $ 0.26
====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended February 1, 1998
-------------------------------------
(unaudited)
Per Share
Income Shares Amounts
-------- ---------- -------------
<S> <C> <C> <C>
Basic EPS
Net Income................................ $3,751 9,793 $ 0.38
======
Effect of dilutive securities:
Convertible Debt........................ 107 363
Options................................. 336
------ -------
Diluted EPS............................... $3,858 10,492 $ 0.37
====== ======= ======
</TABLE>
ESTIMATES INVOLVED IN PREPARING THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVENTORIES
The amount reflected as inventory as of January 31, 1999, and the related
amount for the cost of sales, have been determined using the Company's normal
accounting procedures. In management's opinion, no significant adjustment would
have been required had an actual count of the inventory been made. Inventory as
of January 31, 1999, and November 1, 1998, included the following:
<TABLE>
<CAPTION>
January 31, November 1,
1999 1998
------------ -------------
(unaudited)
(In thousands)
<S> <C> <C>
Raw materials............ $ 30,062 $ 33,936
Work in progress......... 9,913 8,450
Finished goods........... 86,459 43,487
Reserve.................. (6,660) (6,225)
--------- ---------
$ 119,774 $ 79,648
========= =========
</TABLE>
6 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
INCOME TAXES
The Company has calculated current and deferred income tax provisions for
the periods ended January 31, 1999 and February 1, 1998, based on its best
estimate of the effective income tax rate expected to be applicable for the full
fiscal year.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosure About Segments of an Enterprise and Related Information"
(SFAS No. 131), which is effective for the Company's fiscal year ending in 1999.
This statement establishes standards for reporting segment information in annual
and interim financial statements. It also establishes standards for related
disclosure of products and services, geographical areas and major customers.
Under SFAS No. 131, reporting segments are determined consistent with the way
management organizes and evaluates financial information internally for making
operating decisions and assessing performance. The Company does not believe the
adoption of SFAS No. 131 will have a material impact on its consolidated
financial statements.
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133), was issued by the
Financial Accounting Standards Board in June 1998. SFAS No. 133 standardizes
the accounting for derivative instruments, including certain derivative
instruments embedded in other contracts. Under the standard, entities are
required to carry all derivative instruments in the statement of financial
position at fair value. SFAS No. 133 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. The Company will adopt SFAS No.
133 beginning in the first quarter of fiscal 2000. As of January 31, 1999, the
Company had no derivative instruments.
NOTE 3 - COMPREHENSIVE INCOME
Effective November 2, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS No. 130),
which establishes standards for reporting and display of comprehensive income
and its components in a full set of financial statements. Comprehensive income
includes all changes in a company's equity including, among other things,
foreign currency translation adjustments, and unrealized gains (losses) on
marketable securities classified as available-for-sale. Total comprehensive
earnings for the three months ended January 31, 1999 and February 1, 1998
follow:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net earnings......................................................... $ 3,876 $ 3,751
Foreign currency translation adjustments............................. (489) (1,379)
Net unrealized loss on available for sale securities................. (483) -
-------- --------
Total comprehensive income........................................... $ 2,904 $ 2,372
======== ========
</TABLE>
7 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 4 - DEBT
In connection with the acquisition of Circon Corporation ("Circon") (See
Note 5), the Company entered into a Third Amended and Restated Credit Agreement
("Credit Agreement") with several lending institutions. This new Credit
Agreement replaced the Company's previous credit facility. The Credit Agreement
provides for a term loan of $200,000,000 and a $125,000,000 revolving line of
credit. At January 31, 1999, the term loan was fully drawn and approximately
$39,000,000 of the revolver was used to finance the Circon acquisition (See Note
5). Both loans mature on January 6, 2005 with the term loan requiring repayment
in twenty-four quarterly installments ranging from $5,000,000 to $10,000,000,
commencing April 30, 1999. Both loans bear interest, payable quarterly on the
Interest Period as defined in the Credit Agreement. The interest rate is prime
or, for LIBOR advances, the LIBOR rate, plus a margin ranging from 1.5% to
2.75%, indexed according to a defined financial ratio. In connection with the
credit agreement, the Company incurred approximately $5,584,000 in debt
financing fees which are being amortized over the life of the Credit Agreement.
NOTE 5 - ACQUISITION
Effective January 6, 1999, the Company successfully completed a tender
offer for Circon. Upon the completion of the merger of Circon and Maxxim on
January 8, 1999, all of the outstanding stock of Circon was purchased for
approximately $15.00 per share or $260,000,000, including the repayment of
$32,500,000 of Ciron debt and certain fees and expenses incurred in connection
with the acquisition. The Company obtained all funds required in connection with
the acquisition through a bank loan, pursuant to the Third Amended and Restated
Credit Agreement, dated as of January 4, 1999 (See Note 4). The assets acquired
in the Circon acquisition consist primarily of accounts receivable, inventory,
furniture and equipment, intangible assets and owned or leased facilities in
Stamford, Connecticut, Norwalk, Ohio, Racine, Wisconsin and Santa Barbara,
California. Circon markets medical devices for diagnosis and minimally invasive
surgery and general surgery. This acquisition was accounted for by the purchase
method of accounting and approximately $144,000,000 of intangible assets were
recorded in connection with the transaction (approximately $13,500,000 related
to patents and $130,500,000 related to goodwill). Patents are being amortized
over 15 years and goodwill is being amortized over 30 years, using the straight-
line method in each case. Transition expenses of $3,371,000 were recorded in the
first quarter of fiscal 1999 (See Note 6).
The following unaudited pro forma summary results of operations assume the
acquisition of Circon occurred on November 4, 1996.
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
ENDED 11/1/98 ENDED 11/2/97
1998 1997
-------------- ---------------
(In thousands except per share data)
<S> <C> <C>
Revenues........................................... $ 674,980 $ 689,321
Net income......................................... 3,967 4,132
Basic earnings per share........................... $ 0.31 0.50
Diluted earnings per share......................... 0.30 0.42
</TABLE>
The pro forma adjustments to the historical accounts include (a) the
elimination of intercompany sales, (b) the additional amortization expense
associated with goodwill and intangibles acquired, (c) the additional interest
expense on the debt incurred to make the acquisition, as of the beginning of the
Company's fiscal year, (d) the additional amortization expense associated with
debt financing costs and (e) the federal income tax impact of the previous
adjustments.
8 -
<PAGE>
MAXXIM MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The pro forma information does not purport to be indicative of results of
operations or financial position which would have occurred had the acquisition
been consummated on the date indicated, or which may be expected to occur in the
future by reason of such acquisition.
NOTE 6 -TRANSITION EXPENSES
Transition expenses for 1999 represent expenses incurred in connection
with the Company's sales force restructuring and the acquisition and integration
of Circon with the Company as follows
<TABLE>
<CAPTION>
Three Months Ended
January 31, 1999
------------------
(unaudited)
<S> <C>
Severance................................... $ 1,243
Training.................................... 950
Other transition expenses................... 1,178
----------
$ 3,371
==========
</TABLE>
Other transition expenses include bonuses and professional fees incurred as
a result of the acquisition of Circon. At January 31, 1999 accrued expenses
include $850,000 of transition expenses which were paid during the Company's
second fiscal quarter.
9 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and related notes appearing elsewhere in this
report.
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth, for the periods indicated, the percentage
which selected items in the condensed consolidated statements of operations bear
to net sales:
<TABLE>
<CAPTION>
---------------------------------
Percentage of Net Sales
---------------------------------
Three Months Ended
---------------------------------
January 31, February 1,
1999 1998
------------- -------------
<S> <C> <C>
Net sales.......................................... 100.0% 100.0%
Cost of sales...................................... 69.5% 74.2%
------------- -------------
Gross profit....................................... 30.5% 25.8%
Selling, general and administrative expenses....... 19.9% 17.4%
Transition expenses................................ 2.4% 0.0%
------------- -------------
Income from operations............................. 8.2% 8.4%
Interest expense................................... (3.2%) (3.4%)
Other income, net.................................. 0.0% 0.1%
------------- -------------
Income before income taxes......................... 5.0% 5.1%
Income taxes....................................... 2.2% 2.2%
------------- -------------
Net income......................................... 2.8% 2.9%
------------- -------------
</TABLE>
Net sales - Net Sales for the first fiscal quarter of 1999 increased 6.3%
---------
to $136,126,000 from $128,003,000 reported for the first quarter of 1998. This
increase is primarily the result of increases in glove sales, containment
products and the Circon acquisition, somewhat offset by a decline in custom
procedure tray sales.
Gross profit - In the first quarter of fiscal 1999, the Company's gross
------------
profit was $41,561,000, compared to $33,061,000 reported in the first quarter of
last year, an increase of 25.7% over the prior fiscal period. The Company's
gross profit rate increased to 30.5% in the first quarter of fiscal 1999 from
25.8% in the first quarter of fiscal 1998. The increase in both dollars and
rate are primarily attributable to the addition of containment products and
endoscopy products from the Winfield and Circon acquisitions as well as improved
gross margin in the Company's custom procedure tray and medical examination
glove product lines.
Selling, general and administrative expenses - Selling, general and
--------------------------------------------
administrative expenses for the first quarter were $27,079,000 or 19.9% of net
sales for fiscal 1999 compared to $22,334,000 or 17.4% of net sales for fiscal
1998. The increase in selling, general and administrative spending and
the percentage to net sales is primarily attributable to the higher sales and
marketing costs of Circon products in relation to the Company's historical sales
and marketing costs and expense ratio.
Transition expenses - In the first quarter of fiscal 1999, the Company
-------------------
recorded transition expenses of $3,371,000 related to the restructuring of its
sales force and the acquisition of Circon. (See Note 6)
10 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION - (Continued)
Income from operations - Income from operations was $11,111,000, or 8.2% of
----------------------
net sales, in the first quarter of fiscal 1999 versus $10,727,000, or 8.4% of
net sales, in the comparable period of the prior fiscal year. Excluding the
transition expenses, fiscal 1999 first quarter income from operations was
$14,482,000 or 10.6% of net sales, versus $10,727,000, or 8.4% of net sales, in
the comparable period of the prior fiscal year.
Interest expense - The Company's interest expense was comparable for the
----------------
three months ended January 31, 1999 and February 1, 1998; however, the fiscal
1999 first quarter expense only includes one month of interest from the new
credit facility established to acquire Circon.
Income taxes - The Company's effective tax rate for the three months ended
------------
January 31, 1999 and February 1, 1998 was 43.2% and 42.8%, respectively which is
higher than the statutory rate primarily due to non-deductible goodwill from
acquisitions.
Net income - As a result of the foregoing, net income for the first quarter
----------
of fiscal 1999 was $3,876,000 versus $3,751,000 for fiscal 1998. Excluding the
transition expenses net income would have increased by 58.1%. Diluted earnings
per share was $0.26 for the three months ended January 31, 1999 compared to
$0.37 for the same period last year. Excluding the transition expenses diluted
earnings per share would have been $0.40 versus $0.37 for the same period last
year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At January 31, 1999, the Company had cash and cash equivalents of
$6,967,000, working capital of $117,274,000, long-term liabilities of
$338,829,000 and shareholders' equity of $275,331,000. Cash flow from operating
activities was $9,371,000 in fiscal 1999 versus $11,078,000 in fiscal 1998.
On January 4, 1999, the Company entered into a Third Amended and Restated
Credit Agreement ("Credit Agreement") with several lending institutions in
connection with the acquisition of Circon ("the Transaction"). This new Credit
Agreement replaced the Company's previous credit facility. The Credit Agreement
provides for a term loan of $200,000,000 and a $125,000,000 revolving line of
credit. At January 31, 1999, the term loan was fully drawn and approximately
$39,000,000 of the revolver was used to finance the Circon acquisition (See Note
4 to the condensed consolidated financial statements). Both loans mature on
January 6, 2005 with the term loan requiring repayment in twenty-four quarterly
installments ranging from $5,000,000 to $10,000,000, commencing April 30, 1999.
Both loans bear interest, payable quarterly on the Interest Period as defined in
the Credit Agreement. The interest rate is prime or, for LIBOR advances, the
LIBOR rate, plus a margin ranging from 1.5% to 2.75%, indexed according to a
defined financial ratio. In connection with the credit agreement, the Company
incurred approximately $5,584,000 in debt financing fees which are being
amortized over the life of the Credit Agreement.
In March 1998, the Company completed an offering of 4,025,000 shares of its
common stock at a price to the public of $24.00 per share, including 525,000
shares pursuant to the underwriters' exercise of the overallotment option.
After deducting offering costs and commissions, the Company received net
proceeds of approximately $91,418,000. The Company used the proceeds to repay
amounts due under the primary credit facility.
On October 3, 1997, the Company called for redemption of $10,000,000 in
principal amount of its $28,750,000 6 3/4% Debentures due March 1, 2003,
effective as of November 4, 1997. On November 12, 1997, the Company called for
the redemption of the remaining outstanding principal amount of the Debentures
effective as of December 12, 1997. In fiscal 1998, $22,983,000 of the
Debentures converted into 1,276,732 shares of common stock and debt issuance
costs of $705,000 related to these converted Debentures were written off to
additional paid-in capital. The Company paid $369,000 to debenture holders who
did not exercise their right to convert upon surrender of their certificates in
fiscal 1998.
11 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION - (Continued)
The Company believes that its present cash balances, together with internally
generated cash flows and borrowings under the Credit Agreement, will be
sufficient to meet its future working capital requirements. The Company intends
to pursue strategic acquisitions which promote its growth strategy or complement
its present product offerings and increase market share. The Company anticipates
using bank or other commercial financing, seller financing and additional sale
of debt or equity securities to finance any such possible acquisitions.
YEAR 2000
Maxxim Medical relies on electronic information systems technology ("IS") to
operate its business. The Company continuously seeks to improve these systems in
order to provide better service to its customers and to support the Company's
growth objectives. The Company has established a three-phased approach to
address year 2000 issues, including embedded technology ("ET") utilized in the
Company's facilities and equipment. The three phases included in the Company's
approach are (1) identification, (2) compliance, and (3) validation. Internally,
the Company has substantially completed, with the aid of outside consultants,
the identification and compliance phases and is currently completing the
validation phase. The validation phase consists primarily of monitoring and
testing of new software and all other components and interfaces that were
implemented or upgraded as part of the software installation or as a result of
other identified year 2000 deficiencies. The Company expects to complete all
phases of the year 2000 project during the first half of 1999. The Company is
not currently aware of any significant exposure that would prevent it from being
year 2000 compliant on a timely basis.
Externally, the Company is formally communicating with its significant
suppliers, customers and other third parties to assess their year 2000
readiness. The Company is also currently determining its potential exposure if
any of these external parties fail to correct their year 2000 issues in a timely
manner. The Company is currently in the compliance and validation phases with
most of its significant external parties which includes the monitoring and
testing of significant interfaces with those external parties among other
things. There can be no guarantee that such external parties will achieve year
2000 compliance on a timely basis and failure by such significant external
parties to achieve compliance could have a material adverse effect on the
Company.
The Company has not yet obtained information sufficient to quantify the
potential effects of possible internal and external year 2000 non-compliance, to
determine the likely worst case scenarios or to develop contingency plans to
deal with such scenarios. However, as the Company completes its year 2000
project during the first half of 1999, the appropriate contingency plans will be
developed and the implementation will begin. While the Company has proceeded
over the past two years in what it believes to be a reasonable and prudent
manner to identify and remediate year 2000 issues, there can be no assurances
that the Company's internal and external contingency plans, once developed, will
substantially reduce the risk of year 2000 non-compliance. A significant
interruption in the Company's business due to a year 2000 non-compliance issue
could have a material adverse effect on the Company's financial position,
operations and liquidity.
The total incremental direct and indirect costs of the Company's year 2000
project are estimated to be approximately $1.5 million, including costs totaling
approximately $275,000 incurred through January 31, 1999. The estimated costs of
the year 2000 project are not expected to have a material impact on the
Company's business, operations or financial condition in the future periods. The
anticipated impact and the total costs of the year 2000 project are based on
management's best estimates and information currently available.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk. The Company is subject to market risk exposure related to
changes in interest rates on its Amended Credit Facility. Interest on borrowings
under the Amended Credit Facility is at a fixed percentage point spread from
either the prime interest rate or LIBOR. The spread amount is determined
quarterly based upon the Company's financial results compared to a financial
covenant ratio matrix. The Company may, at its option, fix the interest rate for
LIBOR for periods ranging from 30 days to 6 months. At January 31, 1999, the
Company had $239,000,000 outstanding under its Amended Credit Facility. Based
upon this balance, an immediate change of one percent in the interest rate would
cause an increase or decrease in interest expense of approximately $2,390,000 on
an annual basis. The Company's objective in maintaining these variable rate
borrowings is the flexibility obtained regarding early repayment without
penalties and lower overall costs as compared with fixed-rate borrowings.
Foreign Currency Exchange Rate Risk. The Company conducts business in several
foreign currencies. Predominately all of its foreign operations are denominated
in U.S. dollars. Other than some limited trade payables the Company does not
currently have financial instruments that are sensitive to foreign currency
exchange rates.
PART II. OTHER INFORMATION
Items 1, 2, 3, 4 and 5 for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
Item 6. EXHIBITS AND REPORTS
(a) Exhibits
10.28* - Merrill Lynch Special Nonqualified Deferred Compensation
Plan.
10.29* - Merrill Lynch Special Nonqualified Deferred Compensation
Plan Adoption Agreement effective July 1, 1998.
10.30* - Executive Continuity Agreement between Registrant and
Kenneth W. Davidson effective August 31, 1998.
10.31* - Executive Continuity Agreement between Registrant and
Peter M. Graham effective August 31, 1998.
10.32* - Executive Continuity Agreement between Registrant and
Alan S. Blazei effective August 31, 1998.
10.33* - Executive Continuity Agreement between Registrant and
David L. Lamont effective August 31, 1998.
10.34* - Executive Continuity Agreement between Registrant and
Joseph D. Dailey effective August 31, 1998.
10.35* - Executive Continuity Agreement between Registrant and
Henry T. DeHart effective August 31, 1998.
10.36* - Executive Continuity Agreement between Registrant and
Jack F. Cahill effective August 31, 1998.
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PART II. OTHER INFORMATION (Continued)
10.37* - Executive Continuity Agreement between Registrant and
Suzanne R. Garon effective August 31, 1998.
10.38* - Amendment No. 1 to Employment Agreement. 1 between
Registrant and Kenneth W. Davidson effective October 15, 1998.
10.39* - Form of 1999 Non-Employee Directors' Stock Option Plan.
10.40* - Form of 1999 Employee Stock Option Plan
__________
* Compensatory plan or agreement.
(b) Reports on Form 8-K
Report on Form 8-K dated January 19, 1999, was filed reporting
under Item 2 the acquisition of Circon Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAXXIM MEDICAL, INC.
Date: 3/17/99 By: /s/ Kenneth W. Davidson
--------- ----------------------------
Kenneth W. Davidson
Chairman of the Board, President &
Chief Executive Officer
(principal executive officer)
Date: 3/17/99 By: /s/ Peter M. Graham
--------- ----------------------------
Peter M. Graham
Senior Executive Vice President,
Chief Operating Officer & Secretary
(principal financial officer)
Date: 3/17/99 By: /s/ Alan S. Blazei
--------- ----------------------------
Alan S. Blazei
Treasurer, Executive Vice President,
& Corporate Controller
(principal accounting officer)
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EXHIBIT 10.28
The Merrill Lynch Special Nonqualified Deferred Compensation Plan
ARTICLE 1 - INTRODUCTION
1.1 PURPOSE OF PLAN
The Employer has adopted the Plan set forth herein to provide a means by which
certain employees may elect to defer receipt of designated percentages or
amounts of their Compensation and to provide a means for certain other deferrals
of Compensation.
1.2 STATUS OF PLAN
The Plan is intended to be "a plan that is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" within the meaning
of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), and shall be interpreted and administered to the extent
possible in a manner consistent with that intent.
ARTICLE 2 - DEFINITIONS
Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:
2.1 ACCOUNT means, for each Participant, the account established for his or her
benefit under Section 5.1.
2.2 ADOPTION AGREEMENT means the Merrill Lynch Special Nonqualified Deferred
Compensation Plan for Select Employees Adoption Agreement signed by the Employer
to establish the Plan and containing all the options selected by the Employer,
as the same may be amended from time to time.
2.3 CHANGE OF CONTROL means (a) the purchase or other acquisition in one or
more transactions other than from the Employer, by any individual, entity or
group of persons, within the meaning of section 13(d)(3) or 14(d) of the
Securities Exchange Act of 1934 or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934) of 30% or more of either the outstanding shares of common
stock or the combined voting power of the Employer's then outstanding voting
securities entitled to vote generally, or (b) the approval by the stockholders
of the Employer of a reorganization, merger, or consolidation, in each case,
with respect to which persons who were stockholders of the Employer immediately
prior to such reorganization, merger or consolidation do not immediately
thereafter own more than 50% of the combined voting power of the reorganized,
merged or consolidated Employer's then outstanding securities that are
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entitled to vote generally in the election of directors or (c) the sale of
substantially all of the Employer's assets.
2.4 CODE means the Internal Revenue Code of 1986, as amended from time to
time. Reference to any section or subsection of the Code includes reference to
any comparable or succeeding provisions of any legislation that amends,
supplements or replaces such section or subsection.
2.5 COMPENSATION has the meaning elected by the Employer in the Adoption
Agreement.
2.6 EFFECTIVE DATE means the date chosen in the Adoption Agreement as of which
the Plan first becomes effective.
2.7 ELECTION FORM means the participation election form as approved and
prescribed by the Plan Administrator.
2.8 ELECTIVE DEFERRAL means the portion of Compensation that is deferred by a
Participant under Section 4.1.
2.9 ELIGIBLE EMPLOYEE means, on the Effective Date or on any Entry Date
thereafter, each employee of the Employer who satisfied the criteria established
in the Adoption Agreement.
2.10 EMPLOYER means the corporation referred to in the Adoption Agreement, any
successor to all or a major portion of the Employer's assets or business that
assumes the obligations of the Employer and each other entity that is affiliated
with the Employer, which adopts the Plan with the consent of the Employer,
provided that the Employer that signs the Adoption Agreement shall have the sole
power to amend this Plan and shall be the Plan Administrator if no other person
or entity is so serving at any time.
2.11 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any legislation
that amends, supplements or replaces such section or subsection.
2.12 INCENTIVE CONTRIBUTION means a discretionary additional contribution made
by the Employer as described in Section 4.3.
2.13 INSOLVENT means either (i) the Employer is unable to pay its debts as they
become due, or (ii) the Employer is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
2.14 MATCHING DEFERRAL means a deferral for the benefit of a Participant as
described in Section 4.2.
2.15 PARTICIPANT means any individual who participates in the Plan in
accordance with Article 3.
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2.16 PLAN means the Employer's plan in the form of the Merrill Lynch Special
Non-qualified Deferred Compensation Plan for Select Employees and the Adoption
Agreement and all amendments thereto.
2.17 PLAN ADMINISTRATOR means the person, persons or entity designated by the
Employer in the Adoption Agreement to administer the Plan and to serve as the
agent for "Company" with respect to the Trust as contemplated by the agreement
establishing the Trust. If no such person or entity is so serving at any time,
the Employer shall be the Plan Administrator.
2.18 PLAN YEAR means the 12-month period chosen in the Adoption Agreement.
2.19 TOTAL AND PERMANENT DISABILITY means the inability of a Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months, and the permanence and degree of which shall be
supported by medical evidence satisfactory to the Plan Administrator.
2.20 TRUST means the trust established by the Employer that identifies the Plan
as a plan with respect to which assets are to be held by the Trustee.
2.21 TRUSTEE means the trustee or trustees under the Trust.
2.22 YEAR OF SERVICE means the computation period and service requirement
elected in the Adoption Agreement.
ARTICLE 3 -- PARTICIPATION
3.1 COMMENCEMENT OF PARTICIPATION
Any individual who elects to defer part of his or her Compensation in accordance
with Section 4.1 shall become a Participant in the Plan as of the date such
deferrals commence in accordance with Section 4.1. Any individual who is not
already a Participant and whose Account is credited with an Incentive
Contribution shall become a Participant as of the date such amount is credited.
3.2 CONTINUED PARTICIPATION
A Participant in the Plan shall continue to be a Participant so long as any
amount remains credited to his or her Account.
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ARTICLE 4 - ELECTIVE AND MATCHING DEFERRALS
4.1 ELECTIVE DEFERRALS
An individual who is an Eligible Employee on the Effective Date may, by
completing an Election Form and filing it with the Plan Administrator within 30
days following the Effective Date, elect to defer a percentage or dollar amount
of one or more payments of Compensation, on such terms as the Plan Administrator
may permit, which are payable to the Participant after the date on which the
individual files the Election Form. Any individual who becomes an Eligible
Employee after the Effective Date may, by completing an Election Form and filing
it with the Plan Administrator within 30 days following the date on which the
Plan Administrator gives such individual written notice that the individual is
an Eligible Employee, elect to defer a percentage or dollar amount of one or
more payments of Compensation, on such terms as the Plan Administrator may
permit, which are payable to the Participant after the date on which the
individual files the Election Form. Any Eligible Employee who has not otherwise
initially elected to defer Compensation in accordance with this paragraph 4.1
may elect to defer a percentage or dollar amount of one or more payments of
Compensation, on such terms as the Plan Administrator may permit, commencing
with Compensation paid in the next succeeding Plan Year, by completing an
Election Form prior to the first day of such succeeding Plan Year. In addition,
a Participant may defer all or part of the amount of any elective deferral or
matching contribution made on his or her behalf to the Employer's 401(k) plan
for the prior Plan Year but treated as an excess deferral, an excess
contribution or otherwise limited by the application of the limitations of
sections 401(k), 401(m), 415 or 402(q) of the Code, so long as the Participant
so indicates on an Election Form. A Participant's Compensation shall be reduced
in accordance with the Participant's election hereunder and amounts deferred
hereunder shall be paid by the Employer to the Trust as soon as administratively
feasible and credited to the Participant's Account as of the date the amounts
are received by the Trustee.
An election to defer a percentage or dollar amount of Compensation for any Plan
Year shall apply for subsequent Plan Years unless changed or revoked. A
Participant may change or revoke his or her deferral election as of the first
day of any Plan Year by giving written notice to the Plan Administrator before
such first day (or any such earlier date as the Plan Administrator may
prescribe).
4.2 MATCHING DEFERRALS
After each payroll period, monthly, quarterly, or annually, at the Employer's
discretion, the Employer shall contribute to the Trust Matching Deferrals equal
to the rate of Matching Contribution selected by the Employer and multiplied by
the amount of the Elective Deferrals credited to the Participants' Accounts for
such period under Section 4.1. Each Matching Deferral will be credited, as of
the later of the date it is received by the Trustee or the date the Trustee
receives from the Plan Administrator such instructions as the Trustee may
reasonably require to allocate the amount received among the asset accounts
maintained by the Trustee, to the Participants' Accounts pro rata in accordance
with the amount of Elective Deferrals of each Participant, which are taken into
account in calculating the Matching Deferral.
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4.3 INCENTIVE CONTRIBUTIONS
In addition to other contributions provided for under the Plan, the Employer
may, in its sole discretion, select one or more Eligible Employees to receive an
Incentive Contribution to his or her Account on such terms as the Employer shall
specify at the time it makes the contribution. For example, the Employer may
contribute an amount to a Participant's Account and condition the payment of
that amount and accrued earnings thereon upon the Participant remaining employed
by the Employer for an additional specified period of time. The terms specified
by the Employer shall supersede any other provision of this Plan as regards
Incentive Contributions and earnings with respect thereto, provided that if the
Employer does not specify a method of distribution, the Incentive Contribution
shall be distributed in a manner consistent with the election last made by the
particular Participant prior to the year in which the Incentive Contribution is
made. The Employer, in its discretion, may permit the Participant to designate
a distribution schedule for a particular Incentive Contribution provided that
such designation is made prior to the time that the Employer finally determines
that the Participant will receive the Incentive Contribution.
ARTICLE 5 - ACCOUNTS
5.1 ACCOUNTS
The Plan Administrator shall establish an Account for each Participant
reflecting Elective Deferrals, Matching Deferrals and Incentive Contributions
made for the Participant's benefit together with any adjustments for income,
gain or loss and any payments from the Account. The Plan Administrator may
cause the Trustee to maintain and invest separate asset accounts corresponding
to each Participant's Account. The Plan Administrator shall establish sub-
accounts for each Participant that has more than one election in effect under
Section 7.1 and such other sub-accounts as are necessary for the proper
administration of the Plan. As of the last business day of each calendar
quarter, the Plan Administrator shall provide the Participant with a statement
of his or her Account reflecting the income, gains and losses (realized and
unrealized), amounts of deferrals, and distributions of such Account since the
prior statement.
5.2 INVESTMENTS
The assets of the Trust shall be invested in such investments as the Trustee
shall determine. The Trustee may (but is not required to) consider the
Employer's or a Participant's investment preferences when investing the assets
attributable to a Participant's Account.
ARTICLE 6 - VESTING
6.1 GENERAL
A Participant shall be immediately vested in, i.e., shall have a nonforfeitable
right to, all Elective Deferrals, and all income and gain attributable thereto,
credited to his or her Account.
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A Participant shall become vested in the portion of his or her Account
attributable to Matching Deferrals and income and gain attributable thereto in
accordance with the schedule selected by the Employer in the Adoption Agreement,
subject to earlier vesting in accordance with Sections 6.3, 6.4 and 6.5.
6.2 VESTING SERVICE
For purposes of applying the vesting schedule in the Adoption Agreement, a
Participant shall be considered to have completed a Year of Service for each
complete year of full-time service with the Employer or an Affiliate, measured
from the Participant's first date of such employment, unless the Employer also
maintains a 401(k) plan that is qualified under section 401(a) of the Internal
Revenue Code in which the Participant participates, in which case the rules
governing vesting service under that plan shall also be controlling under this
Plan.
6.3 CHANGE OF CONTROL
A Participant shall become fully vested in his or her Account immediately prior
to a Change of Control of the Employer.
6.4 DEATH OR DISABILITY
A Participant shall become fully vested in his or her Account immediately prior
to termination of the Participant's employment by reason of the Participant's
death or Total and Permanent Disability. Whether a Participant's termination of
employment is by reason of the Participant's Total and Permanent Disability
shall be determined by the Plan Administrator in its sole discretion.
6.5 INSOLVENCY
A Participant shall become fully vested in his or her Account immediately prior
to the Employer becoming Insolvent, in which case the Participant will have the
same rights as a general creditor of the Employer with respect to his or her
Account balance.
ARTICLE 7 - PAYMENTS
7.1 ELECTION AS TO TIME AND FORM OF PAYMENT
A Participant shall elect (on the Election Form used to elect to defer
Compensation under Section 4.1) the date at which the Elective Deferrals and
vested Matching Deferrals (including any earnings attributable thereto) will
commence to be paid to the Participant. The Participant shall also elect
thereon for payments to be paid in either:
a. a single lump-sum payment;
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b. a series of substantially equal periodic payments (not less frequently than
annually) over a period elected by the Participant not to exceed the life
expectancy of the Participant (or the joint life expectancies of the
Participant and the designated beneficiary of the Participant);
c. payments equal to the amounts paid under an annuity chosen by the
Participant that is acceptable to the Trustee;
d. annual installments over a period elected by the Participant, the amount of
each installment to equal the balance of his or her Account immediately
prior to the installment divided by the number of installments remaining to
be paid.
Each such election will be effective for the Plan Year for which it is made and
succeeding Plan Years, unless changed by the Participant. Any change will be
effective only for Elective Deferrals and Matching Deferrals made for the first
Plan Year beginning after the date on which the Election Form containing the
change is filed with the Plan Administrator. Except as provided in Sections
7.2, 7.3, 7.4 or 7.5, payment of a Participant's Account shall be made in
accordance with the Participant's elections under this Section 7.1
7.2 CHANGE IN CONTROL
As soon as possible following a Change of Control of the Employer, each
Participant shall be paid his or her entire Account balance (including any
amount vested pursuant to Section 6.3) in a single lump sum.
7.3 TERMINATION OF EMPLOYMENT
Upon termination of a Participant's employment for any reason other than death
and prior to the attainment of the Retirement Age specified in the Adoption
Agreement, the vested portion of the Participant's Account (including any
portion vested pursuant to Section 6.4 as a consequence of the Participant's
Total and Permanent Disability) shall be paid to the Participant in a single
lump sum as soon as practicable following the date of such termination;
provided, however, that the Plan Administrator, in its sole discretion, may pay
out a Participant's Account balance in annual installments if the Participant's
employment terminates by reason of the Participant's Total and Permanent
Disability.
7.4 DEATH
If a Participant dies prior to the complete distribution of his or her Account,
the balance of the Account shall be paid as soon as practicable to the
Participant's designated beneficiary or beneficiaries, in accordance with the
payment election in effect under Section 7.1 on the date of the Participant's
death. Alternatively, Participant may elect that the balance of the Account be
paid to the Participant's beneficiary or beneficiaries.
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Any designation of beneficiary and form of payment to such beneficiary shall be
made by the Participant on an Election Form filed with the Plan Administrator
and may be changed by the Participant at any time by filing another Election
Form containing the revised instructions. If no beneficiary is designated or no
designated beneficiary survives the Participant, payment shall be made to the
Participant's surviving spouse, or, if none, to his or her issue per stirpes, in
a single payment. If no spouse or issue survives the Participant, payment shall
be made in a single lump sum to the Participant's estate.
7.5 UNFORESEEN EMERGENCY
If a Participant suffers an unforeseen emergency, as defined herein, the Plan
Administrator, in its sole discretion, may pay to the Participant only that
portion, if any, of the vested portion of his or her Account that the Plan
Administrator determines is necessary to satisfy the emergency need, including
any amounts necessary to pay any federal, state or local income taxes reasonably
anticipated to result from the distribution. A Participant requesting an
emergency payment shall apply for the payment in writing in a form approved by
the Plan Administrator and shall provide such additional information as the Plan
Administrator may require. For purposes of this paragraph, "unforeseen
emergency" means an immediate and heavy financial need resulting from any of the
following:
a. expenses that are not covered by insurance and which the Participant or his
or her spouse or dependent has incurred as a result of, or is required to
incur in order to receive, medical care;
b. the need to prevent eviction of a Participant from his or her principal
residence or foreclosure on the mortgage of the Participant's principal
residence; or
c. any other circumstance that is determined by the Plan Administrator in its
sole discretion to constitute an unforeseen emergency that is not covered
by insurance and which cannot reasonably be relieved by the liquidation of
the Participant's assets.
7.6 FORFEITURE OF NON-VESTED AMOUNTS
To the extent that any amounts credited to a Participant's Account are not
vested at the time such amounts are otherwise payable under Sections 7.1 or 7.3,
such amounts shall be forfeited and shall be used to satisfy the Employer's
obligation to make contributions to the Trust under the Plan.
7.7 TAXES
All federal, state or local taxes that the Plan Administrator determines are
required to be withheld from any payments made pursuant to this Article 7 shall
be withheld.
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ARTICLE 8 - PLAN ADMINISTRATOR
8.1 PLAN ADMINISTRATION AND INTERPRETATION
The Plan Administrator shall oversee the administration of the Plan. The Plan
Administrator shall have complete control and authority to determine the rights
and benefits and all claims, demands and actions arising out of the provisions
of the Plan of any Participant, beneficiary, deceased Participant, or other
person having or claiming to have any interest under the Plan. The Plan
Administrator shall have the complete discretion to interpret the Plan and to
decide all matters under the Plan. Such interpretation and decision shall be
final, conclusive and binding on all Participants and any person claiming under
or through any Participant, in the absence of clear and convincing evidence that
the Plan Administrator acted arbitrarily and capriciously. Any individual(s)
serving as Plan Administrator who is a Participant will not vote or act on any
matter relating solely to himself or herself. When making a determination or
calculation, the Plan Administrator shall be entitled to rely on information
furnished by a Participant, a beneficiary, the Employer or the Trustee. The
Plan Administrator shall have the responsibility for complying with any
reporting and disclosure requirements of ERISA.
8.2 POWERS, DUTIES, PROCEDURES, ETC.
The Plan Administrator shall have such powers and duties, may adopt such rules
and tables, may act in accordance with such procedures, may appoint such
officers and agents, may delegate such powers and duties, may receive such
reimbursements and compensation, and shall follow such claims and appeal
procedures with respect to the Plan as it may establish.
8.3 INFORMATION
To enable the Plan Administrator to perform its functions, the Employer shall
supply full and timely information to the Plan Administrator on all matters
relating to the compensation of Participants, their employment, retirement,
death, termination of employment, and such other pertinent facts as the Plan
Administrator may require.
8.4 INDEMNIFICATION OF PLAN ADMINISTRATOR
The Employer agrees to indemnify and to defend to the fullest extent permitted
by law any officer(s) or employee(s) who serve as Plan Administrator (including
any such individual who formerly served as Plan Administrator) against all
liabilities, damages, costs and expenses (including attorneys' fees and amounts
paid in settlement of any claims approved by the Employer) occasioned by any act
or omission to act in connection with the Plan, if such act or omission is in
good faith.
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ARTICLE 9 - AMENDMENT AND TERMINATION
9.1 AMENDMENTS
The Employer shall have the right to amend the Plan from time to time, subject
to Section 9.3, by an instrument in writing that has been executed on the
Employer's behalf by its duly authorized officer.
9.2 TERMINATION OF PLAN
This Plan is strictly a voluntary undertaking on the part of the Employer and
shall not be deemed to constitute a contract between the Employer and any
Eligible Employee (or any other employee) or a consideration for, or an
inducement or condition of employment for, the performance of the services by
any Eligible Employee (or other employee). The Employer reserves the right to
terminate the Plan at any time, subject to Section 9.3, by an instrument in
writing that has been executed on the Employer's behalf by its duly authorized
officer. Upon termination, the Employer may (a) elect to continue to maintain
the Trust to pay benefits hereunder as they become due as if the Plan had not
terminated or (b) direct the Trustee to pay promptly to Participants (or their
beneficiaries) the vested balance of their Accounts. For purposes of the
preceding sentence, in the event the Employer chooses to implement clause (b),
the Account balances of all Participants who are in the employ of the Employer
at the time the Trustee is directed to pay such balances shall become fully
vested and nonforfeitable. After Participants and their beneficiaries are paid
all Plan benefits to which they are entitled, all remaining assets of the Trust
attributable to Participants who terminated employment with the Employer prior
to termination of the Plan and who were not fully vested in their Accounts under
Article 6 at that time shall be returned to the Employer.
9.3 EXISTING RIGHTS
No amendment or termination of the Plan shall adversely affect the rights of any
Participant with respect to amounts that have been credited to his or her
Account prior to the date of such amendment or termination.
ARTICLE 10 - MISCELLANEOUS
10.1 NO FUNDING
The Plan constitutes a mere promise by the Employer to make payments in
accordance with the terms of the Plan and Participants and beneficiaries shall
have the status of general unsecured creditors of the Employer. Nothing in the
Plan will be construed to give any employee or any other person rights to any
specific assets of the Employer or of any other person. In all events, it is
the intent of the Employer that the Plan be treated as unfunded for tax purposes
and for purposes of Title 1 of ERISA.
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10.2 NON-ASSIGNABILITY
None of the benefits, payments, proceeds or claims of any Participant or
beneficiary shall be subject to any claim of any creditor of any Participant or
beneficiary and, in particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor of such Participant or
beneficiary, nor shall any Participant or beneficiary have any right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits or
payments or proceeds that he or she may expect to receive, contingently or
otherwise, under the Plan.
10.3 LIMITATION OF PARTICIPANTS' RIGHTS
Nothing contained in the Plan shall confer upon any person a right to be
employed or to continue in the employ of the Employer, or interfere in any way
with the right of the Employer to terminate the employment of a Participant in
the Plan at any time, with or without cause.
10.4 PARTICIPANTS BOUND
Any action with respect to the Plan taken by the Plan Administrator or the
Employer or the Trustee or any action authorized by or taken at the direction of
the Plan Administrator, the Employer or the Trustee shall be conclusive upon all
Participants and beneficiaries entitled to benefits under the Plan.
10.5 RECEIPT AND RELEASE
Any payment to any Participant or beneficiary in accordance with the provisions
of the Plan shall, to the extent thereof, be in full satisfaction of all claims
against the Employer, the Plan Administrator and the Trustee under the Plan, and
the Plan Administrator may require such Participant or beneficiary, as a
condition precedent to such payment, to execute a receipt and release to such
effect. If any Participant or beneficiary is determined by the Plan
Administrator to be incompetent by reason of physical or mental disability
(including minority) to give a valid receipt and release, the Plan Administrator
may cause the payment or payments becoming due to such person to be made to
another person for his or her benefit without responsibility on the part of the
Plan Administrator, the Employer or the Trustee to follow the application of
such funds.
10.6 GOVERNING LAW
The Plan shall be construed, administered, and governed in all respects under
and by the laws of the state in which the Employer maintains its primary place
of business. If any provision shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.
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10.7 HEADINGS AND SUBHEADINGS
Headings and subheadings in this Plan are inserted for convenience only and are
not to be considered in the construction of the provisions hereof.
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EXHIBIT 10.29
The Merrill Lynch Special Nonqualified Deferred Compensation Plan Adoption
Agreement
Please complete the information requested in the Adoption Agreement to establish
the specific provisions of your plan. This document and the Merrill Lynch
Special Nonqualified Deferred Compensation Plan for Select Employees govern the
rights of plan participants and should, therefore, be disclosed to participants
and retained as part of your permanent records.
1. EMPLOYER INFORMATION
A. Name of Plan: MAXXIM MEDICAL, INC. DEFERRED COMPENSATION PLAN.
B. Name and Address of employer sponsoring the Plan.
Maxxim Medical, Inc.
10300 49/th/ St. N.
Clearwater, FL 33762
C. Provide employer's primary contact for the Plan and telephone and FAX
numbers. Also include the employer's Tax Identification Number.
Suzanne Garon
Vice President
813/561-2100
fax: 813/572-8840
TIN: 74-1941367
D. Give the first day of the 12-month period for which the employer pays
taxes: November 1.
2. PLAN INFORMATION
A. What is the effective date of the Plan? July 1, 1998.
B. Plan Year Ends. Your "Plan Year" is the 12-consecutive-month period for
which you credit elective and matching deferrals and keep Plan records. Enter
the last day of your Plan Year. For example, if you use the calendar year as
your plan year, enter "December 31." If you use a different 12-month period -
for instance if your business is on a fiscal year - enter the last day of your
fiscal year, e.g., "July 31."
3. ELIGIBLE EMPLOYEES
The following persons or classes of persons shall be Participants (enter the
names or positions of individuals eligible to participate or the criteria used
to identify Participants):
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As determined by Company each year.
4. COMPENSATION
Compensation is used to determine the amount of Elective Deferrals a Participant
can elect. Compensation under the Plan is defined as the regular or base salary
and bonuses payable to the individual by the Employer.
For purposes of the Plan, Compensation will be determined before giving effect
to Elective Deferrals and other salary reduction amounts that are not included
in the Participant's gross income under Code section 125, 401(k), 402(h) or
403(b).
5. CONTRIBUTIONS
A. Elective Deferrals. Participants may elect to reduce their Compensation and
to have Elective Deferrals credited to their Accounts by making an election
under the Plan (which may be changed each year for later Plan Years as described
in the plan), but no Participant may defer more than 90% of base and 100% of
bonus.
B. Matching Deferrals. If the Employer elects to match Elective Deferrals,
specify the matching rate and indicate the amount of the Participant's Elective
Deferrals that will be matched. You may also elect to decide each year whether
Matching Deferrals will be made and, if so, what that year's matching rate will
be.
The Employer will credit Matching Deferrals for each Participant equal to 100%
of the first 6% of the Participant's Compensation which is elected as an
Elective Deferral, but no Matching Deferral will be made on Elective Deferrals
in excess of $______ per (specify time period if applicable).
C. Discretionary Incentive Contributions. The Employer may make Discretionary
Incentive Contributions in any amounts the Employer selects. These contributions
will be subject to the vesting schedule selected in Item 6C.
The Employer will make Discretionary Incentive Contributions under the Plan.
[_] yes [_] no
6. VESTING OF MATCHING DEFERRALS AND DISCRETIONARY INCENTIVE CONTRIBUTIONS.
A. Vesting Schedule for Matching Deferrals.
Matching Deferrals vest in accordance with the following schedule: 100%
immediate.
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B. Vesting Service.
Indicate whether you will give credit for vesting service for time spent with a
predecessor employer, and if so, specify the maximum number of years and the
type of predecessor service for which credit will be given. N/A
C. Vesting Schedule for Discretionary Incentive Contributions.
Indicate how the portion of a Participant's Account attributable to
Discretionary Incentive Contributions is to vest.
Unless otherwise specified by the Employer at the time a Discretionary Incentive
Contribution is made, Discretionary Incentive Contributions vest in accordance
with the following schedule: 100% immediate.
7. ACCOUNTS.
Account balances are to be invested as a single fund, then divided.
8. RETIREMENT AGE
The Retirement Age under the Plan is age 55. A Participant terminating
employment before Retirement Age for reasons other than death or Total and
Permanent Disability will not be entitled to receive any installment payments
elected on the Election Form.
9. WITHDRAWALS WHILE WORKING
Withdrawals for Unforeseen Emergency. Withdrawals of the vested portion of a
Participant's Account for unforeseen emergencies are permitted to the full
extent allowable under the plan.
NOTE: Withdrawals are strictly limited as described in Plan Section 7.5 It is
the Plan Administrator's responsibility to ensure that the limits are being
followed. Excess withdrawals may result in loss of the tax deferral on all
amounts credited under the Plan for the benefit of all Participants.
10. ADMINISTRATION
Plan Administrator. The Plan Administrator is legally responsible for the
operation of the Plan, including:
. Keeping track of which employees are eligible to participate in the Plan
and the date each employee becomes eligible to participate.
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. Maintaining Participants' Accounts, including all sub-accounts required for
different contribution types and payment elections, and keeping track of all
elections made by Participants under the Plan and any other relevant
information.
. Transmitting important communications to the Participants, and obtaining
relevant information from Participants such as changes in investment selections.
. Filing important reports required to be submitted to governmental agencies.
The Plan Administrator will be the person or persons identified below:
Alan S. Blazei, Treasurer, Vice President
11. SIGNATURES
After reviewing the Adoption Agreement, enter the current date and the name of
the Employer. The signature of the Employer or the person signing for the
Employer must be witnessed. Note that the person signing for the Employer must
be authorized to do so, such as by a resolution of the Employer's board of
directors or governing by-laws.
While the Merrill Lynch Special Nonqualified Deferred Compensation Plan for
Select Employees, including this Adoption Agreement, has been designed in a
manner to permit Participants to defer federal income tax on amounts credited to
their accounts until the amounts are actually paid, neither Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the sponsor of this document, nor any of
this affiliates ("Merrill Lynch") provide any assurances of that result in the
Employer's particular situation or assume any responsibility in this regard.
Please consult your tax advisor regarding the tax consequences of this Plan to
you and your employees and the advisability of submitting this document to the
Internal Revenue Service to obtain a ruling concerning those consequences. In
addition, please consult your independent legal counsel with respect to
securities law issues. By signing this Adoption Agreement the Employer
acknowledges that no representations or warranties as to the tax consequences to
the Employer and Participants of the operation of this Plan have been made by
Merrill Lynch.
MAXXIM MEDICAL, INC.
By: /s/ Kenneth W. Davidson
-------------------------------------
Kenneth W. Davidson
Chairman of the Board
President and CEO
6/25/98
Witness:
/s/ Suzanne R. Garon
----------------------------------------
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EXHIBIT 10.30
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Kenneth W. Davidson, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may result in the departure or distraction of key management
personnel to the detriment of
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the Company and its shareholders in this period when their undivided attention
and commitment to the best interests of the Company and its shareholders are
particularly important. Accordingly, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in the Control of the
Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time; there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control; or directs the Executive to report to anyone other than the
Company's Board of Directors, any of which is not remedied within 30
days after receipt by the Company of notice by the Executive, of such
reduction in responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
In addition, if at any time during the period of the twelve (12) months
immediately following a Change in Control of the Company, the Executive elects
to voluntarily terminate his employment, this shall be considered to constitute
a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule
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14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirements;
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to three times the
highest annual level of total taxable compensation paid to the
Executive by the Company (including any and all bonus amounts,
transfers of stock and other property or other items recognized as
"annualized includable compensation" under Code Section 280G(d)(1) and
reported on Form W-2) during the three calendar years ended
immediately prior to such termination, (ii) the immediate vesting of
and an extended period of at least 180 days following the date of such
termination in which to exercise all previously granted but unvested
and/or unexercised options to acquire securities from the Company
which were outstanding on the date of the termination (any of the
Company's Stock Option Agreements with the Executive shall hereby be
deemed to be amended to modify any provisions inconsistent with the
vesting and extended exercise period terms herein stated), and (iii)
continuing health coverage for the Executive and his family for a
period of twenty-four (24) months following the date of such
termination, at the level, benefits and cost commensurate with that
which the Executive enjoyed with the Company immediately prior to such
Change in Control.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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<PAGE>
another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any,
relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Board, after written demand for substantial
performance that specifically identifies the manner in which the
Company believes the Executive has not substantially performed his
duties is delivered by the Company to the Executives;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of at least six (6) consecutive months, to perform the
essential functions of his job notwithstanding the provision of
reasonable accommodation by Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
(ii) an opportunity for the Executive, together with his counsel, to be heard
before the Board, and (iii) delivery to the Executive of written notice of
termination from the Board finding that, in the good faith opinion of the Board,
the
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<PAGE>
Executive was guilty of conduct set forth above in clause (a) or (b) and
specifying the particulars thereof in detail.
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made under
Section 6 hereof (the "Termination Payment") or any other payment under this
Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. Notwithstanding the foregoing, if any payment, accelerated
vesting or other benefit provided by the Company to the Executive which is
contingent upon a Change in Control of the Company, whether paid or payable
pursuant to the terms of this Agreement or otherwise (a "Parachute Payment") is
determined to be a parachute payment subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code (such excise tax, together with any
interest and penalties incurred by the Executive with respect to such excise
tax, are referred to as the "Excise Tax"), the Company shall make an additional
payment (the "Gross-Up Payment") to the Executive in an amount such that the net
amount of the Gross-Up Payment the Executive retains, after payment by the
Executive of all taxes imposed upon the Gross-Up Payment, including, without
limitation, the Excise Tax and any applicable federal, state or local income
taxes (and any interest and penalties imposed with respect thereto) on the
Gross-Up Payment, will be equal to the Excise Tax liability imposed upon the
Executive with respect to all Parachute Payments other than the Gross-Up
Payment.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with a specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable
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attorneys' fees incurred by the successful party or parties
(including, without limitation, costs, expenses and fees on any
appeals), and if the successful party recovers judgment in any such
action or proceeding, such costs, expenses and attorneys' fees shall
be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder in the event of a Termination Following Change in Control of the
Company, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed to be the
date on which the Executive shall receive such compensation from the
Company. As used in this Agreement, "Company" shall mean the Company as
herein above defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation
of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties
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hereto (until notice of a change thereof is given as provided in this
Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Kenneth W. Davidson
6133 Pasadena Point Boulevard
Gulfport, Florida 33707
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the Executive, his dependents, beneficiaries or estate provided for
in this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Kenneth W. Davidson
-------------------------------- --------------------------------
Donald R. DePriest Kenneth W. Davidson
Member Maxxim Medical
Board of Directors -
Compensation Committee
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EXHIBIT 10.31
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Peter M. Graham, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may result in the departure or distraction of key management
personnel to the detriment of
40 -
<PAGE>
the Company and its shareholders in this period when their undivided attention
and commitment to the best interests of the Company and its shareholders are
particularly important. Accordingly, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in the Control of the
Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control".
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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<PAGE>
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to two times the
highest annual level of total taxable compensation paid to the
Executive by the Company (including any and all bonus amounts,
transfers of stock and other property or other items recognized as
"annualized includable compensation" under Code Section 280G(d)(1) and
reported on Form W-2) during the three calendar years ended
immediately prior to such termination, (ii) the immediate vesting of
and an extended period of at least 180 days following the date of
termination in which to exercise all previously granted but unvested
and or unexercised options to acquire securities from the Company
which were outstanding on the date of the termination (any of the
Company's Stock Option Agreements with the Executive shall hereby be
deemed to be amended to modify any provisions inconsistent with the
vesting and extended exercise period terms herein stated), and (iii)
continuing health coverage for the Executive and his family for a
period of eighteen (18) months following the date of such termination,
at the level, benefits and cost commensurate with that which the
Executive enjoyed with the Company immediately prior to such Change in
Control. This continuing health coverage shall apply to the Company's
obligation to provide the Executive with COBRA continuation coverage
through 608 Section 601 et seq. of the Employee Retirement Income
Security Act of 1974, as amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of four (4) consecutive months or an aggregate of one hundred
twenty-one (121) days in any calendar year, to perform the essential
functions of his job notwithstanding the provision of reasonable
accommodation by Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
(ii) an opportunity for the Executive, together with his counsel, to be heard
before the Board, and (iii) delivery to the Executive of written notice of
termination from the Board finding that, in the good faith opinion of the Board,
the
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Executive was guilty of conduct set forth above in clause (a) or (b) and
specifying the particulars thereof in detail.
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection
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with the Section 280G opinion required by this Section, the Company and
Executive shall obtain, at the Company's expense, the advice of a firm of
recognized executive compensation consultants concerning the reasonableness of
any item of compensation to be received by the Executive, on which advise legal
counsel may rely in providing their opinion. In the event that the provisions of
Sections 280G and 4999 of the Code or any successor provision are repealed
without succession, this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the
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same terms as the Executive would be entitled hereunder in the event of a
Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49th Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Peter M. Graham
10300 49th Street North
Clearwater, Florida 33762
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
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<PAGE>
Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Peter M. Graham
---------------------------------- ------------------------------
Donald R. DePriest Peter M. Graham
Member Maxxim Medical
Board of Directors -
Compensation Committee
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<PAGE>
EXHIBIT 10.32
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Alan S. Blazei, an individual (the "Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may result in the departure or distraction of key management
personnel to the detriment of
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<PAGE>
the Company and its shareholders in this period when their undivided attention
and commitment to the best interests of the Company and its shareholders are
particularly important. Accordingly, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in the Control of the
Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control".
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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<PAGE>
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to two times the
highest annual level of total taxable compensation paid to the
Executive by the Company (including any and all bonus amounts,
transfers of stock and other property or other items recognized as
"annualized includable compensation" under Code Section 280G(d)(1) and
reported on Form W-2) during the three calendar years ended
immediately prior to such termination, (ii) the immediate vesting of
and an extended period of at least 180 days following the date of such
termination in which to exercise all previously granted but unvested
and/or unexercised options to acquire securities from the Company
which were outstanding on the date of the termination (any of the
Company's Stock Option Agreements with the Executive shall hereby be
deemed to be amended to modify any provisions inconsistent with the
vesting and extended exercise period terms herein stated), and (iii)
continuing health coverage for the Executive and his family for a
period of eighteen (18) months following the date of such termination,
at the level, benefits and cost commensurate with that which the
Executive enjoyed with the Company immediately prior to such Change in
Control. This continuing health coverage shall apply to the Company's
obligation to provide the Executive with COBRA continuation coverage
through 608 Section 601 et seq. of the Employee Retirement Income
Security Act of 1974, as amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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<PAGE>
another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of four (4) consecutive months or an aggregate of one hundred
twenty-one (121) days in any calendar year, to perform the essential
functions of his job notwithstanding the provision of reasonable
accommodation by Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
(ii) an opportunity for the Executive, together with his counsel, to be heard
before the Board, and (iii) delivery to the Executive of written notice of
termination from the Board finding that, in the good faith opinion of the Board,
the
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<PAGE>
Executive was guilty of conduct set forth above in clause (a) or (b) and
specifying the particulars thereof in detail.
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection
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with the Section 280G opinion required by this Section, the Company and
Executive shall obtain, at the Company's expense, the advice of a firm of
recognized executive compensation consultants concerning the reasonableness of
any item of compensation to be received by the Executive, on which advise legal
counsel may rely in providing their opinion. In the event that the provisions of
Sections 280G and 4999 of the Code or any successor provision are repealed
without succession, this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the
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Executive compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder in the event of a
Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Alan S. Blazei
2061 Hawaii Avenue NE
St. Petersburg, Florida 33703
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
56 -
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g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the Executive, his dependents, beneficiaries or estate provided for
in this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Alan S. Blazei
------------------------------- --------------------------------
Donald R. DePriest Alan S. Blazei
Member Maxxim Medical
Board of Directors -
Compensation Committee
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EXHIBIT 10.33
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and David L. Lamont, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may
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result in the departure or distraction of key management personnel to the
detriment of the Company and its shareholders in this period when their
undivided attention and commitment to the best interests of the Company and its
shareholders are particularly important. Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
the Control of the Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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<PAGE>
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to the highest annual
level of total taxable compensation paid to the Executive by the
Company (including any and all bonus amounts, transfers of stock and
other property or other items recognized as "annualized includable
compensation" under Code Section 280G(d)(1) and reported on Form W-2)
during the three calendar years ended immediately prior to such
termination, (ii) the immediate vesting of and an extended period of
at least 180 days following the date of such termination in which to
exercise all previously granted but unvested and/or unexercised
options to acquire securities from the Company which were outstanding
on the date of the termination (any of the Company's Stock Option
Agreements with the Executive shall hereby be deemed to be amended to
modify any provisions inconsistent with the vesting and extended
exercise period terms herein stated), and (iii) continuing health
coverage for the Executive and his family for a period of twelve (12)
months following the date of such termination, at the level, benefits
and cost commensurate with that which the Executive enjoyed with the
Company immediately prior to such Change in Control. This continuing
health coverage shall apply to the Company's obligation to provide the
Executive with COBRA continuation coverage through 608 Section 601 et.
seq. of the Employee Retirement Income Security Act of 1974, as
amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
61 -
<PAGE>
another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of two (2) consecutive months or an aggregate of sixty-one (61)
days in any calendar year, to perform the essential functions of his
job notwithstanding the provision of reasonable accommodation by
Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
and (ii) delivery to the Executive of written notice of termination from the
Company finding that the Executive was guilty of conduct set forth above in
clause (a) or (b) and specifying the particulars thereof in detail.
62 -
<PAGE>
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection with the Section 280G opinion required by
this Section, the Company and Executive shall obtain, at the Company's expense,
the advice of a firm of recognized executive compensation consultants concerning
the reasonableness of any item of compensation
63 -
<PAGE>
to be received by the Executive, on which advise legal counsel may rely in
providing their opinion. In the event that the provisions of Sections 280G and
4999 of the Code or any successor provision are repealed without succession,
this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder in the event of a
64 -
<PAGE>
Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: David L. Lamont
4697 Aylesford Drive
Palm Harbor, Florida 34685
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
65 -
<PAGE>
Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ David L. Lamont
-------------------------------- -------------------------------
Donald R. DePriest David L. Lamont
Member of Maxxim Medical
Board of Directors -
Compensation Committee
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<PAGE>
EXHIBIT 10.34
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Joseph D. Dailey, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may
67 -
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result in the departure or distraction of key management personnel to the
detriment of the Company and its shareholders in this period when their
undivided attention and commitment to the best interests of the Company and its
shareholders are particularly important. Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
the Control of the Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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<PAGE>
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to the highest annual
level of total taxable compensation paid to the Executive by the
Company (including any and all bonus amounts, transfers of stock and
other property or other items recognized as "annualized includable
compensation" under Code Section 280G(d)(1) and reported on Form W-2)
during the three calendar years ended immediately prior to such
termination, (ii) the immediate vesting of and an extended period of
at least 180 days following the date of such termination in which to
exercise all previously granted but unvested and/or unexercised
options to acquire securities from the Company which were outstanding
on the date of the termination (any of the Company's Stock Option
Agreements with the Executive shall hereby be deemed to be amended to
modify any provisions inconsistent with the vesting and extended
exercise period terms herein stated), and (iii) continuing health
coverage for the Executive and his family for a period of twelve (12)
months following the date of such termination, at the level, benefits
and cost commensurate with that which the Executive enjoyed with the
Company immediately prior to such Change in Control. This continuing
health coverage shall apply to the Company's obligation to provide the
Executive with COBRA continuation coverage through 608 Section 601 et.
seq. of the Employee Retirement Income Security Act of 1974, as
amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of two (2) consecutive months or an aggregate of sixty-one (61)
days in any calendar year, to perform the essential functions of his
job notwithstanding the provision of reasonable accommodation by
Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
and (ii) delivery to the Executive of written notice of termination from the
Company finding that the Executive was guilty of conduct set forth above in
clause (a) or (b) and specifying the particulars thereof in detail.
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<PAGE>
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection with the Section 280G opinion required by
this Section, the Company and Executive shall obtain, at the Company's expense,
the advice of a firm of recognized executive compensation consultants concerning
the reasonableness of any item of compensation
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<PAGE>
to be received by the Executive, on which advise legal counsel may rely in
providing their opinion. In the event that the provisions of Sections 280G and
4999 of the Code or any successor provision are repealed without succession,
this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder in the event of a
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<PAGE>
Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Joseph D. Dailey
6875 San Jose Loop
New Port Richey, Florida 34655
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
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<PAGE>
Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Joseph D. Dailey
---------------------------------- -------------------------------
Donald R. DePriest Joseph D. Dailey
Member of Maxxim Medical
Board of Directors -
Compensation Committee
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<PAGE>
EXHIBIT 10.35
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Henry T. DeHart, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may
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<PAGE>
result in the departure or distraction of key management personnel to the
detriment of the Company and its shareholders in this period when their
undivided attention and commitment to the best interests of the Company and its
shareholders are particularly important. Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
the Control of the Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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<PAGE>
(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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<PAGE>
(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to the highest annual
level of total taxable compensation paid to the Executive by the
Company (including any and all bonus amounts, transfers of stock and
other property or other items recognized as "annualized includable
compensation" under Code Section 280G(d)(1) and reported on Form W-2)
during the three calendar years ended immediately prior to such
termination, (ii) the immediate vesting of and an extended period of
at least 180 days following the date of such termination in which to
exercise all previously granted but unvested and/or unexercised
options to acquire securities from the Company which were outstanding
on the date of the termination (any of the Company's Stock Option
Agreements with the Executive shall hereby be deemed to be amended to
modify any provisions inconsistent with the vesting and extended
exercise period terms herein stated), and (iii) continuing health
coverage for the Executive and his family for a period of twelve (12)
months following the date of such termination, at the level, benefits
and cost commensurate with that which the Executive enjoyed with the
Company immediately prior to such Change in Control. This continuing
health coverage shall apply to the Company's obligation to provide the
Executive with COBRA continuation coverage through 608 Section 601 et.
seq. of the Employee Retirement Income Security Act of 1974, as
amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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<PAGE>
another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of two (2) consecutive months or an aggregate of sixty-one (61)
days in any calendar year, to perform the essential functions of his
job notwithstanding the provision of reasonable accommodation by
Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
and (ii) delivery to the Executive of written notice of termination from the
Company finding that the Executive was guilty of conduct set forth above in
clause (a) or (b) and specifying the particulars thereof in detail.
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<PAGE>
8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection with the Section 280G opinion required by
this Section, the Company and Executive shall obtain, at the Company's expense,
the advice of a firm of recognized executive compensation consultants concerning
the reasonableness of any item of compensation
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<PAGE>
to be received by the Executive, on which advise legal counsel may rely in
providing their opinion. In the event that the provisions of Sections 280G and
4999 of the Code or any successor provision are repealed without succession,
this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder in the event of a
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Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Henry T. DeHart
2136 Pinnacle Circle South
Palm Harbor, Florida 34684
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
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<PAGE>
Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Henry T. DeHart
------------------------------- --------------------------------
Donald R. DePriest Henry T. DeHart
Member of Maxxim Medical
Board of Directors -
Compensation Committee
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<PAGE>
EXHIBIT 10.36
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Jack F. Cahill, an individual (the "Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and the uncertainty and questions which it necessarily raises among
management, may result in the departure or distraction of key management
personnel to the detriment of
85 -
<PAGE>
the Company and its shareholders in this period when their undivided attention
and commitment to the best interests of the Company and its shareholders are
particularly important. Accordingly, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in the Control of the
Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to the highest annual
level of total taxable compensation paid to the Executive by the
Company (including any and all bonus amounts, transfers of stock and
other property or other items recognized as "annualized includable
compensation" under Code Section 280G(d)(1) and reported on Form W-2)
during the three calendar years ended immediately prior to such
termination, (ii) the immediate vesting of and an extended period of
at least 180 days following the date of such termination in which to
exercise all previously granted but unvested and/or unexercised
options to acquire securities from the Company which were outstanding
on the date of the termination (any of the Company's Stock Option
Agreements with the Executive shall hereby be deemed to be amended to
modify any provisions inconsistent with the vesting and extended
exercise period terms herein stated), and (iii) continuing health
coverage for the Executive and his family for a period of twelve (12)
months following the date of such termination, at the level, benefits
and cost commensurate with that which the Executive enjoyed with the
Company immediately prior to such Change in Control. This continuing
health coverage shall apply to the Company's obligation to provide the
Executive with COBRA continuation coverage through 608 Section 601 et.
seq. of the Employee Retirement Income Security Act of 1974, as
amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by any compensation earned by the Executive as
a result of employment by
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another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of two (2) consecutive months or an aggregate of sixty-one (61)
days in any calendar year, to perform the essential functions of his
job notwithstanding the provision of reasonable accommodation by
Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
and (ii) delivery to the Executive of written notice of termination from the
Company finding that the Executive was guilty of conduct set forth above in
clause (a) or (b) and specifying the particulars thereof in detail.
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8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection with the Section 280G opinion required by
this Section, the Company and Executive shall obtain, at the Company's expense,
the advice of a firm of recognized executive compensation consultants concerning
the reasonableness of any item of compensation
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to be received by the Executive, on which advise legal counsel may rely in
providing their opinion. In the event that the provisions of Sections 280G and
4999 of the Code or any successor provision are repealed without succession,
this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder in the event of a
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Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid on ly if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Jack F. Cahill
4428 South Ferncroft
Tampa, Florida 33609
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
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Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Jack F. Cahill
------------------------------ ----------------------------------
Donald R. DePriest Jack F. Cahill
Member of Maxxim Medical
Board of Directors -
Compensation Committee
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<PAGE>
EXHIBIT 10.37
EXECUTIVE CONTINUITY AGREEMENT
THIS EXECUTIVE CONTINUITY AGREEMENT ("Agreement") made and entered into as
of the 31st day of August, 1998 by and between Maxxim Medical, Inc., a Texas
corporation (the "Company") and Suzanne R. Garon, an individual (the
"Executive").
RECITALS:
A. The Executive is a principal officer of the Company and an integral
part of its management.
B. The Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened
change in control of the Company.
C. This Agreement is not intended to alter materially the compensation
and benefits that the Executive could reasonably expect in the absence
of a change in control of the Company and, accordingly, this
Agreement, though taking effect upon the parties' execution hereof,
will be operative only upon a change of control of the Company, as
that term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Operation of Agreement.
----------------------
This Agreement shall be effective immediately upon its execution by the
parties hereto as of the date first above written. Anything in this Agreement
to the contrary notwithstanding, neither this Agreement nor any provision
thereof shall be operative unless and until there has been a "Change in Control"
of the Company as defined in Section 5 below. Upon such a Change in Control of
the Company, this Agreement and all provisions hereof shall become operative
immediately.
2. Purpose and Intent.
------------------
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control of the Company exists and that such
possibility, and
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the uncertainty and questions which it necessarily raises among management, may
result in the departure or distraction of key management personnel to the
detriment of the Company and its shareholders in this period when their
undivided attention and commitment to the best interests of the Company and its
shareholders are particularly important. Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
the Control of the Company.
3. Term of Agreement.
-----------------
This Agreement shall be effective upon the execution thereof by the
parties, and shall remain in effect until December 31, 2004, at which time it
shall terminate; provided, however, that the term of this Agreement shall be
extended by one day for each day after December 31, 2002 that notice of
termination by either party has not been given to the other, so that at all
times after December 31, 2004, if neither party has given notice of termination
then this Agreement shall have a two (2) year remaining term. Either party may
give notice of termination of this Agreement at any time, with or without cause.
If any notice of termination is given on or before December 31, 2002, then this
Agreement shall terminate December 31, 2004. If any notice of termination is
given after December 31, 2002, then this Agreement shall terminate on that date
two years after such notice is given.
4. Termination Following Change in Control.
---------------------------------------
For purposes hereof only, a termination of the Executive's employment
following a Change in Control ("Termination Following Change in Control") shall
be deemed to occur if at any time during the two-year period immediately
following a Change in Control:
(a) there has been an actual termination by the Company of the Executive's
employment, other than "for cause" as defined herein;
(b) the Company reduces the Executive's base salary, bonus computation or
changes his title without his prior express approval;
(c) the Company substantially reduces the Executive's responsibilities as
in effect immediately prior to the Change in Control or as the same
may be increased from time to time, or there is a change in employment
conditions deemed by the Executive to be materially adverse as
compared to those in effect immediately prior to the Change in
Control, any of which is not remedied within 30 days after receipt by
the Company of notice by the Executive, of such reduction in
responsibilities or change in employment conditions;
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(d) without the Executive's express written consent, the Company requires
the Executive to be based anywhere other than Pinellas County,
Florida, except for required travel on the Company's business to an
extent substantially consistent with that prior to the Change in
Control;
(e) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(f) the Company takes any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the Company fails to provide the Executive with
the number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect on the
date of the Change in Control.
The voluntary termination by the Executive of his employment by the Company
shall in no event constitute a "Termination Following Change in Control."
5. Definition of Change in Control.
-------------------------------
A Change in Control will be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), is or
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding equity securities ("Equity
Securities");
(b) individuals are elected to the Board causing a majority of the Board
to consist of persons other than (i) persons who were members of the
Board as of the date of the adoption of this Agreement by the Board
and (ii) persons who were nominated for election as members of the
Board at a time when the majority of the Board consisted of persons
who were members of the Board as of the date of the adoption of this
Agreement by the Board; provided, that any person nominated for
election by the Board composed entirely of persons described in (i) or
(ii) , or of persons who were themselves nominated by such Board,
shall for this purpose be deemed to have been nominated by a Board
composed of persons described in (i);
(c) an event occurs which constitutes 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 Exchange Act, whether or
not the Company is then subject to such reporting requirements;
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(d) there is a merger or consolidation of the Company in which the Company
does not survive as an independent public company other than a merger
of the Company in which the holders of Equity Securities immediately
prior to the merger have the same proportionate ownership of Equity
Securities of the surviving company immediately after the merger; or
(e) the business or businesses of the Company for which the Executive's
services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale
of assets (including stock of a subsidiary) of the Company, or
otherwise.
6. Compensation Following Termination.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, upon a
Termination Following Change in Control, as defined in Section 4,
which occurs during the term of this Agreement, the Executive shall be
entitled to (i) a lump sum payment, within fifteen (15) days following
the date of such termination, in an amount equal to the highest annual
level of total taxable compensation paid to the Executive by the
Company (including any and all bonus amounts, transfers of stock and
other property or other items recognized as "annualized includable
compensation" under Code Section 280G(d)(1) and reported on Form W-2)
during the three calendar years ended immediately prior to such
termination, (ii) the immediate vesting of and an extended period of
at least 180 days following the date of such termination in which to
exercise all previously granted but unvested and/or unexercised
options to acquire securities from the Company which were outstanding
on the date of the termination (any of the Company's Stock Option
Agreements with the Executive shall hereby be deemed to be amended to
modify any provisions inconsistent with the vesting and extended
exercise period terms herein stated), and (iii) continuing health
coverage for the Executive and his family for a period of twelve (12)
months following the date of such termination, at the level, benefits
and cost commensurate with that which the Executive enjoyed with the
Company immediately prior to such Change in Control. This continuing
health coverage shall apply to the Company's obligation to provide the
Executive with COBRA continuation coverage through 608 Section 601 et.
seq. of the Employee Retirement Income Security Act of 1974, as
amended.
(b) The executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 6 be reduced by any amounts to which the Executive
shall be entitled by law (nor shall payment hereunder be deemed in
lieu of such amounts), by
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any compensation earned by the Executive as a result of employment by
another employer or by retirement benefits after the date of
termination or voluntary termination, or otherwise.
(c) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or registration. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of any or all of
such payments.
7. Definition of "For Cause".
-------------------------
The termination of the Executive's employment by the Company shall be
deemed "For Cause" if it results from:
(a) the willful and continued failure by the Executive substantially to
perform his employment duties or regular failure to follow the
specific directives of the Executive's supervisor, after written
demand for substantial performance that specifically identifies the
manner in which the Company believes the Executive has not
substantially performed his duties is delivered by the Company to the
Executive;
(b) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise;
(c) the Executive's death; or
(d) an accident or illness which renders the Executive unable, for a
period of two (2) consecutive months or an aggregate of sixty-one (61)
days in any calendar year, to perform the essential functions of his
job notwithstanding the provision of reasonable accommodation by
Employer.
For purposes of this section, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated For Cause under subsection
(a) or (b) without (i) reasonable advance written notice to the Executive
setting forth the reasons for the Company's intention to terminate For Cause,
and (ii) delivery to the Executive of written notice of termination from the
Company finding that the Executive was guilty of conduct set forth above in
clause (a) or (b) and specifying the particulars thereof in detail.
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8. Tax Treatment.
-------------
It is the intention of the parties that no portion of the payment made
under Section 6 hereof (the "Termination Payment") or any other payment under
this Agreement, or payments to or for the Executive's benefit under any other
agreement or plan, be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for the Executive's benefit in the nature of
compensation, receipt of which is contingent on the Change in Control of the
Company, and to which Section 280G of the Code or any successor provision
thereto applies (in the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the Executive may receive
without becoming subject to the tax imposed by Section 4999 of the Code or any
successor provisions or which the Company may pay without loss of deduction
under Section 280G of the Code or any successor provision. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision.
Within six (6) days following delivery of written notice by the Company to
the Executive of the Company's belief that there is a payment or benefit due
which will result in an excess parachute payment as defined in Section 280G of
the Code or any successor provision, the Company and the Executive, at the
Company's expense, shall obtain the opinion of legal counsel and certified
public accountants, as the Company and Executive may mutually agree upon, which
opinions need not be unqualified, which sets forth (i) the amount of the
Executive's Base Period Income, as defined in Section 280G of the Code, (ii) the
present value of Total Payments, and (iii) the amount and present value of any
excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder, or any other payment
determined by such counsel to be includable in Total Payments, shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase securities of the Company which have had their vesting rights
accelerated hereunder, and (ii) by the amount of any cash received hereunder, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this Section, including the
calculations, notices and opinions provided herein, shall be based upon the
conclusive presumption that (i) the compensation and benefits provided herein
and (ii) any other compensation, including but not limited to any accrued
benefits, earned by the Executive prior to the Change in Control of the Company
pursuant to the Company's compensation programs, would have been reasonable if
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company. In the event such legal
counsel so requests, in connection with the Section 280G opinion required by
this Section, the Company and Executive shall obtain, at the Company's expense,
the advice of a firm of recognized executive
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compensation consultants concerning the reasonableness of any item of
compensation to be received by the Executive, on which advise legal counsel may
rely in providing their opinion. In the event that the provisions of Sections
280G and 4999 of the Code or any successor provision are repealed without
succession, this Section shall be of no further force or effect.
9. Miscellaneous.
-------------
(a) Intent. This Agreement is made by the Company in order to induce the
------
Executive to remain in the Company's employ, with the Company's
acknowledgment and intent that it will be relied upon by the
Executive, and in consideration of the services to be performed by the
Executive from time to time hereafter. However, this Agreement is not
an agreement to employ the Executive for any period of time or at all,
and the terms and conditions of the Executive's employment, other than
those expressly addressed herein, shall be subject to and governed by
a separate agreement of employment between the Company and the
Executive, if any. This Agreement is intended only as an agreement to
provide the Executive with specified compensation and benefits if he
or she is terminated following a Change in Control.
(b) Attorney's Fees. If any action at law or in equity is commenced to
---------------
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful
party or parties (including, without limitation, costs, expenses and
fees on any appeals), and if the successful party recovers judgment in
any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of the judgment.
(c) Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of Florida.
(d) Successors and Assigns.
----------------------
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree in writing to perform this Agreement. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall
require the Company to pay to the Executive compensation from the Company
in the same amount and on the
100 -
<PAGE>
same terms as the Executive would be entitled hereunder in the event of a
Termination Following Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which the
Executive shall receive such compensation from the Company. As used in this
Agreement, "Company" shall mean the Company as herein above defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(ii) This Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee,
to Executive's estate.
e. Notices. Except as otherwise expressly provided herein, any notice,
-------
demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by
United States mail and shall be deemed to have been given when
personally delivered or three (3) days after having been deposited in
the United States mail, certified mail, return receipt requested,
properly addressed with postage prepaid. All notices or demands shall
be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is
given as provided in this Section 9(e)), shall be as follows:
The Company: Maxxim Medical, Inc.
10300 49/th/ Street
Clearwater, Florida 33762
Attention: Compensation Committee
Executive: Suzanne R. Garon
6642 Winding Oak Drive
Tampa, Florida 33625
f. Severability. In the event any provision in this Agreement shall be
------------
invalid, illegal or unenforceable, such provision shall be severed
from the rest of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
g. Setoff. The Company shall have no right of setoff or counterclaim, in
-------
respect of any claim, debt or obligation to it, against any payments
to the
101 -
<PAGE>
Executive, his dependents, beneficiaries or estate provided for in
this Agreement.
h. Entirety. This Agreement constitutes the entire agreement of the
--------
parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understandings relating to the
subject matter hereof.
i. Amendment. This Agreement may be amended only by a written instrument
---------
signed by the parties hereto, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
"COMPANY" "EXECUTIVE"
MAXXIM MEDICAL, INC.
By: /s/ Donald R. DePriest /s/ Suzanne R. Garon
------------------------------ --------------------------------
Donald R. DePriest Suzanne R. Garon
Member of Maxxim Medical
Board of Directors -
Compensation Committee
102 -
<PAGE>
EXHIBIT 10.38
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDMENT NO. 1, dated as of October 15, 1998, to that certain
Employment Agreement, dated as of the 1st day of November, 1997 (the
"Agreement"), between Maxxim Medical, Inc., a Texas corporation (the "Company"),
and Kenneth W. Davidson (the "Executive").
WHEREAS, the Company and the Executive entered into the Agreement to
provide for the employment of the Executive by the Company; and
WHEREAS, the Company and the Executive desire to make certain changes in
the terms of the Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used herein shall have the meanings ascribed to
them in the Agreement.
2. Section 5(d) of the Agreement is hereby amended to increase the dollar
amount of the loan or loans to be made to the Executive from $400,000 to
$500,000.
3. Section 8(d) of the Agreement is hereby amended by deleting the
parenthetical contained in the first sentence of the second paragraph thereof,
and replacing it with the following parenthetical:
(as defined in the Executive Continuity Agreement between the Company and
the Executive, dated as of August 31, 1998, hereafter the "Termination
Agreement")
4. Except as otherwise provided herein, the Agreement shall remain in
full force and effect.
5. This Amendment No. 1 may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
6. This Amendment No. 1 shall become effective upon execution by each of
the parties hereto, and thereafter any reference to the Agreement shall be
deemed to be a reference to the Agreement as amended hereby.
[Remainder of page intentionally left blank.
Next page is signature page.]
103 -
<PAGE>
IN WITNESS WHEREOF, the individual party hereto has executed this
Amendment to the Agreement, and the corporate party hereto has caused this
Amendment to the Agreement to be executed by its respective duly authorized
officer, as of the day and year first above written.
MAXXIM MEDICAL, INC.
By /s/ Donald R. DePriest
-------------------------------------
Donald R. DePriest
Member of Maxxim Medical
Board of Directors -
Compensation Committee
/s/ Kenneth W. Davidson
---------------------------------------
KENNETH W. DAVIDSON
104 -
<PAGE>
EXHIBIT 10.39
MAXXIM MEDICAL, INC.
1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
THIS 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (this "Plan") is
adopted by the Board of Directors (the "Board of Directors") of MAXXIM MEDICAL,
INC., a Texas corporation (the "Company"), effective this 9th day of April, 1999
(the "Adoption Date").
W I T N E S S E T H:
WHEREAS, the Company believes that allowing certain non-employee directors
of the Company to obtain shares of common stock, $.001 par value ("Common
Stock"), of the Company by granting stock options as hereinafter provided is
beneficial to the initial and continued success of the Company;
NOW, THEREFORE, the Company agrees to provide for the granting of stock
options to the non-employee directors of the Company, subject to the following
conditions and provisions:
1. Purpose. The purpose of this Plan is to secure for the Company and its
-------
stockholders the benefits that flow from providing its non-employee directors
with the incentive inherent in common stock ownership. The Company recognizes
that stock option plan may allow the Company to attract and retain qualified and
competent persons for service as members of the Company's Board of Directors
because of the opportunity offered to acquire a proprietary interest in the
business of the Company.
2. Amount of Stock. The total number of shares of Common Stock to be
---------------
subject to options granted pursuant to this Plan shall not exceed 80,000 shares.
This total number of shares shall be subject to appropriate and automatic
increase or decrease under Section 11 of this Plan (without the need for further
action on the part of the Board of Directors of the Company), in the event of a
stock dividend, or upon a subdivision, split-up, combination or reclassification
of, the shares purchasable under such options, as contemplated in Section 11.
3. Eligibility and Participation. Options may be granted pursuant to this
-----------------------------
Plan only to non-employee directors of the Company (such non-employee directors
being hereinafter sometimes called "directors"). Directors who are employees of
the Company or a parent or a subsidiary of the Company shall not be eligible to
participate in this Plan. The holder of any option granted pursuant to this Plan
shall not have any of the rights of a shareholder with respect to the shares
covered by the option until one or more certificates for such shares shall be
delivered to him upon the due exercise of the option.
105 -
<PAGE>
4. Option Agreement. The terms and provisions of each option granted
----------------
under this Plan shall be as set forth in a Non-Employee Director Stock Option
Agreement (hereinafter called an "Option Agreement"), between the Company and
the director receiving such option in form and content substantially similar to
the Option Agreement attached hereto as EXHIBIT A.
5. Options Shares. On the Adoption Date, the Company shall grant to each
--------------
director an option to purchase 10,000 shares of Common Stock, subject to the
provisions of Section 16 hereof. In addition, on the date that any new director
is elected at an annual meeting of the shareholders of the Company during the
term of this Plan, the Company shall grant to each such new director an option
to purchase 10,000 shares of Common Stock.
6. Price. The purchase price per share of Common Stock purchasable under
-----
options granted pursuant to this Plan on the Adoption Date shall be eighty-five
percent (85%) of the opening price per share of the Common Stock on the New York
Stock Exchange on the Adoption Date. The purchase price per share of Common
Stock purchasable under options granted pursuant to this Plan after the Adoption
Date shall be eighty-five percent (85%) of the opening price per share of the
Common Stock on the New York Stock Exchange, or such other exchange as the
Common Stock may then be traded, on the day such options are granted. The full
purchase price of shares purchased shall be paid upon exercise of the option.
The purchase price per share shall be subject to adjustment under Section 11 of
this Plan.
7. Exercise Period. All shares of Common Stock purchasable under any
---------------
option granted under this Plan will be purchasable after the first anniversary
of the first annual meeting of the shareholders of the Company held after the
grant of such option, provided that if the option is granted on the date of an
annual shareholders' meeting, such shares will be purchasable after the next
annual shareholders' meeting, and further provided that the director holding
such option must have served as a director of the Company at all times from the
date of grant.
8. Option Period. The period of time within which options granted
-------------
pursuant to this Plan must be exercised shall be a period of three (3) years
after such option first becomes exercisable. The actual expiration date stated
in an Option Agreement is hereinafter called the "Expiration Date."
9. Termination. Each Option Agreement will provide that:
-----------
(a) If the director for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be a
director of the Company, the option may be exercised by the director within
one (1) year after the date of such termination, but in no event later than
the Expiration Date.
(b) If the director becomes permanently and totally disabled, as
hereinafter defined, while serving as a director of the Company, the option
will automatically
106 -
<PAGE>
become exercisable in full and may be exercised by the director at any time
before one (1) year after the date of disability or the Expiration Date,
whichever is earlier.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months. In the absence of any specific requirements
for this determination, the decision of the Board of Directors of the
Company, as aided by any physicians designated by the Board of Directors
shall be conclusive, and the Board of Directors shall send written notice
to the director of the determination that he has become permanently and
totally disabled.
(c) In the event that the director dies while serving as a director
of the Company, the option will automatically become exercisable in full
and may be exercised by a legatee or legatees of the director under his
will, or by his personal representatives or distributees, at any time
before one (1) year after the date of death or the Expiration Date,
whichever is earlier.
Nothing in (a), (b) or (c) shall extend the time for exercising any option
granted pursuant to this Plan beyond the Expiration Date.
10. Assignability. Each Option Agreement shall provide that the option
-------------
granted thereby shall not be transferable or assignable by the director in any
form or fashion, and that the option may be exercised only by the director
during his lifetime, or as otherwise expressly set forth in EXHIBIT A hereto.
11. Changes in Capital Structure. Each option granted pursuant to this
----------------------------
Plan shall provide that if the option shall, subject to Section 12, be exercised
subsequent to any share dividend, stock split, reverse stock split, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
reorganization, or liquidation occurring after the date of the grant of the
option, as a result of which shares of any class have been issued in respect of
outstanding Common Stock or Common Stock has been changed into the same or a
different number of shares of the same or another class or classes, then the
director or directors so exercising the option shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of shares that, if
Common Stock (as authorized at the date of the grant of the option) had been
purchased at the date of the grant of the option for the same aggregate price
(on the basis of the price per share set forth in Section 6 hereof) and had not
been disposed of, such director or directors would be holding, at the time of
such exercise, as a result of such purchase and all such share dividends, stock
split, reverse stock split, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations, or
liquidations; provided, however, that no fractional share shall be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued.
107 -
<PAGE>
12. Change in Control. Notwithstanding anything in this Plan to the
-----------------
contrary, in the event of a Change in Control (as defined below), the
unexercised options outstanding under this Plan will automatically become
exercisable in full as of the effective date of such Change in Control. In the
event of a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, any
outstanding options hereunder may be terminated by the Company as of the
effective date of such dissolution, liquidation, merger or consolidation by
giving notice to each holder thereof of its intention to do so not less than ten
(10) days preceding such effective date and permitting the exercise until such
effective date, or the Expiration Date if earlier, of all of such outstanding
options. Notwithstanding the preceding sentence, if the Company is not the
surviving corporation as a result of the Company being reorganized or merged or
consolidated with another corporation while unexercised options are outstanding
under this Plan, the surviving corporation may assume the unexercised options
outstanding under this Plan or substitute new options in the surviving
corporation for the outstanding options; provided, however, that the excess of
the aggregate fair market value of the securities subject to the options
immediately after the substitution or assumption over the aggregate option price
of such shares is not less than the excess of the aggregate fair market value of
the Common Stock subject to the outstanding option immediately before such
substitution or assumption over the aggregate option price of such Common Stock.
The existence of this Plan or of options granted hereunder shall not in any way
prevent any Change in Control transaction, and no holder of options granted
under this Plan shall have the right to prevent any such transaction.
"Change in Control" of the Company means and shall be deemed to have
occurred if and when (i) any "person" (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934) becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of directors do not constitute a majority of the Board
of Directors following such election; (iii) the shareholders of the Company
approve the dissolution or liquidation of the Company; (iv) the shareholders of
the Company approve an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not subsidiaries of the
Company, as a result of which less than 50% of the outstanding voting securities
of the surviving or resulting entity are, or are to be, owned by former
shareholders of the Company (excluding from the term "former shareholders" a
shareholder who is, or as a result of the transaction in question becomes, an
"affiliate", as that term is used in the Securities Exchange Act of 1934 and the
Rules promulgated thereunder, of any party to such merger, consolidation or
reorganization); or (v) the shareholders of the Company approve the sale of
substantially all of the Company's business and/or assets to a person or entity
which is not a subsidiary of the Company.
13. Registration Rights. The directors shall have no registration rights
-------------------
with respect to the shares of Common Stock issuable upon exercise of the options
granted under this Plan.
108 -
<PAGE>
14. Sale of Stock after Exercise of Option. Any director exercising any
--------------------------------------
option under the terms of this Plan will be required to agree that, unless the
shares obtained as a result of such exercise have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or may otherwise be
sold pursuant to an available exemption from such registration under the
Securities Act, such director will not dispose of any such shares thereafter
without the prior approval of the Company.
Unless the Company files a registration statement with respect to the
shares issuable under the Plan, the Company shall require that a legend be
placed on any share certificates issued through the exercise of any option
granted under this Plan with respect to the foregoing restrictions. Such legend
shall be placed either on the front or back of such share certificates and shall
note that the shares are governed by this Plan.
This Plan shall be kept at the registered office of the Company and shall
be available for inspection by any appropriate party.
15. Amendment of the Plan. The Board of Directors may from time to time
---------------------
alter, amend, suspend or discontinue this Plan and make rules for its
administration; provided, however, that the Plan may not be amended more than
once every six (6) months, other than to conform to changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
16. Shareholder Approval. This Plan will be submitted to the shareholders
--------------------
of the Corporation for approval at the 1999 Annual Meeting of Shareholders and
shall be approved by the affirmative vote of a majority of the outstanding
shares of Common Stock of the Company voted at the Meeting, in person or by
proxy, provided that the total vote cast on the proposal to adopt the Plan
(including abstentions) represents more than 50% of the total number of shares
of Common Stock outstanding on the record date set for the Meeting. In the
event that the Plan is not so approved, the Plan and all options previously
granted thereunder shall automatically terminate.
17. Termination Of Plan. Unless terminated earlier, this Plan shall
-------------------
terminate effective the date of the 2003 Annual Meeting of Shareholders. Any
option outstanding under this Plan at the time of the termination of this Plan
shall remain in effect until such option shall have been exercised or the
Expiration Date thereof occurs, whichever is earlier.
18. Exhibits. EXHIBIT A (attached) is hereby incorporated into this Plan
--------
by reference.
109 -
<PAGE>
EXHIBIT "A"
MAXXIM MEDICAL, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT (this "Agreement"),
effective as of __________________, _____ (the Effective Date"), by and between
MAXXIM MEDICAL, INC., a Texas corporation (the "Company"), and
__________________, an individual residing in (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee is a member of the Board of Directors of the Company
but is neither an employee nor an executive officer of the Company on the
effective date hereof; and
WHEREAS, in consideration of the Optionee's past service to the Company and
to provide the Optionee with additional incentive to remain as a director of the
Company, the Company has agreed to grant the Optionee options to purchase shares
of common stock, $.001 par value ("Common Stock"), of the Company; and
WHEREAS, by granting the Optionee options to purchase shares of Common
Stock pursuant to the terms of this Agreement, the Company intends to carry out
the purposes set forth in the 1999 Non-Employee Directors' Stock Option Plan of
the Company (the "Plan") adopted by the Board of Directors of the Company (the
"Board of Directors"); and
WHEREAS, the Company and the Optionee desire to set forth the terms and
conditions of such options to purchase Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the option
---------------
(the "Option") to purchase all or any part of an aggregate of Ten Thousand
(10,000) shares of Common Stock (such shares, as increased or decreased in
accordance with Section 8 hereof, being referred to herein as the "Option
Shares") for a purchase price of $_______________ per share (the "Exercise
Price"), upon the additional terms and conditions hereinafter set forth.
2. Availability of Option Shares and Term of Option. The Option shall be
------------------------------------------------
fully exercisable after the first anniversary of the first annual meeting of the
shareholders of the Company held after the grant of such option, provided that
if the option is granted on the date of an annual shareholders' meeting, such
shares will be purchasable after the next annual
<PAGE>
shareholders' meeting (the "Vesting Date"), and provided further that such
vesting is expressly conditioned upon the Optionee having served as a director
of the Company at all times from the date of grant up to the date preceding the
Vesting Date. The Option shall expire and terminate as to any Option Shares not
purchased by the Optionee on or prior to the expiration of three years from the
Vesting Date (the "Expiration Date"), subject to earlier termination as set
forth in Section 13.
3. Method of Exercising the Option. Subject to the limitations contained
-------------------------------
in Section 2, the Option shall be exercised by the Optionee delivering to the
Company, on or prior to the Expiration Date or the date of any earlier
termination pursuant to Section 13 (i) written notice from the Optionee stating
that the Optionee is exercising the Option, and specifying the number of Option
Shares that the Optionee desires to purchase ("Notice"), and (ii) a check
payable to the order of the Company in an amount equal to the then current
Exercise Price multiplied by the number of Option Shares that the Optionee has
indicated he desires to purchase in the Notice (the "Payment"). The Option may
be exercised as to all, or any whole number, of the Option Shares exercisable as
of the date of the Notice. The failure of the Optionee to exercise the Option as
to all of the Option Shares available for exercise as of the date of the Notice
shall not be deemed to be a waiver or forfeiture of the Optionee's right to
later exercise the Option as to any Option Shares not previously purchased. For
purposes of Section 2 hereof, the exercise of the Option to purchase the Option
Shares specified in the Notice shall be deemed to have taken place on the date
that Notice and Payment are actually received by the Company in accordance with
this Section 3.
4. Transferability of Option. The Option shall be exercisable (i) during
-------------------------
the Optionee's lifetime only by the Optionee, or his guardian or legal
representative, or (ii) in the event of his death, by his heirs or legatees in
accordance with his will or the laws of descent and distribution (but only to
the extent the Option would be exercisable by the Optionee under Section 2 or as
set forth in Section 13), and shall not otherwise be transferable or assignable,
in whole or in part.
5. Payment of Taxes upon Exercise. The Optionee understands and
------------------------------
acknowledges that under currently applicable law, the Optionee may be required
to include in his taxable income, at the time of exercise of the Option, the
amount by which the value of the Option Shares purchased (the "Exercise Shares")
exceeds the Exercise Price paid. The Optionee hereby authorizes the Company to
withhold Exercise Shares of a value equivalent to the amount of tax required to
be withheld by the Company out of any taxable income derived by the Optionee
upon exercise of the Option; provided, however, that the Optionee may, in the
alternative, in order to satisfy such withholding requirement, deliver to the
Company cash or other shares of Common Stock owned by the Optionee.
6. Investment Representation/Securities Law Requirements. The Optionee
-----------------------------------------------------
represents that the Option Shares available for purchase by the Optionee under
this Agreement will be acquired only for investment and not with a view toward
resale or distribution. The Optionee agrees and understands that the Option
Shares may be restricted securities as defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"),
<PAGE>
and, in such case, may not be sold, assigned or transferred, unless the sale,
assignment or transfer of such shares is registered under the Securities Act and
applicable blue sky laws, as now in effect or hereafter amended or under
applicable exemptions therefrom. In the case of any sale under such an
exemption, the Company will require an opinion of counsel in form and substance
satisfactory to the Company from counsel acceptable to the Company that such
registrations are not required. The Optionee further understands and agrees
that, unless issued pursuant to an effective registration statement under the
Securities Act, the following legend shall be set forth on each certificate
representing Option Shares:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 or under the blue sky laws of any state, and may
not be sold, assigned or transferred except upon such registration or upon
receipt by the Company of an opinion of counsel in form and substance
satisfactory to the Company from counsel acceptable to the Company that
such registrations are not required for such sale, assignment or transfer."
7. No Rights as Shareholder. The Optionee shall not have any rights as a
------------------------
shareholder with respect to any of the Option Shares until the date of issuance
by the Company of a stock certificate to the Optionee for such shares. Except as
otherwise provided in Section 11 hereof, the Optionee shall not be entitled to
any dividends, cash or otherwise, or any adjustment of the Exercise Price of any
of the Option Shares for such dividends, if the record date therefor is prior to
the date of issuance of such stock certificate. Upon valid exercise of the
Option by the Optionee, the Company agrees to cause a valid stock certificate
for the number of Option Shares then purchased to be issued and delivered to the
Optionee within seven (7) business days.
8. Corporate Proceedings of the Company. Notwithstanding anything in this
------------------------------------
Agreement to the contrary, in the event of a Change in Control (as defined in
the Plan), the Option will automatically become exercisable in full as of the
effective date of such Change in Control. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation, the Option may be terminated by the Company as of
the effective date of such dissolution, liquidation, merger or consolidation by
giving notice to Optionee of its intention to do so not less than ten (10) days
preceding such effective date and permitting the exercise until such effective
date, or the Expiration Date if earlier, of the Option. Notwithstanding the
preceding sentence, if the Company is not the surviving corporation as a result
of the Company being reorganized or merged or consolidated with another
corporation while the Option is outstanding, the surviving corporation may
assume the Option or substitute a new option in the surviving corporation for
the Option; provided, however, that the excess of the aggregate fair market
value of the securities subject to the options immediately after the
substitution or assumption over the aggregate option price of such shares is not
less than the excess of the aggregate fair market value of the Option Shares
immediately before such substitution or assumption over the Exercise Price of
Option Shares. The existence of the Option shall not in any way prevent any
Change of Control transaction, and Optionee shall have no right to prevent any
such transaction.
<PAGE>
If the Option shall be exercised subsequent to any share dividend, stock
split, reverse stock split, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization, or liquidation occurring
after the Effective Date, as a result of which shares of any class have been
issued in respect of outstanding Common Stock or Common Stock has been changed
into the same or a different number of shares of the same or another class or
classes without payment of consideration therefor, then the Optionee shall
receive, for the Exercise Price paid upon such exercise, the aggregate number
and class of shares that, if the Option Shares had been purchased at the
Effective Date and had not been disposed of, the Optionee would be holding, at
the time of such exercise, as a result of such purchase and all such share
dividends, stock split, reverse stock split, split-ups, recapitalizations,
mergers, consolidations, combinations or exchanges of shares, reorganizations,
or liquidations; provided, however, that no fractional share shall be issued
upon any such exercise, and the Exercise Price shall be appropriately reduced on
account of any fractional share not issued.
The issuance by the Company of shares of stock of any class of securities
convertible into shares of stock of any class, including Common Stock, or the
issuance by the Company of Common Stock, for cash, property or services
rendered, either upon direct sale or upon the exercise of rights, options or
warrants to subscribe therefor, or the conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of shares of Common Stock then subject to the Option.
9. Notices. All notices, demands and other communications required or
-------
permitted hereunder shall be deemed to have been properly given or delivered
when delivered personally or sent by certified or registered mail, return
receipt requested with all postage fully prepaid, addressed to the respective
parties hereto as follows:
If to the Company: Maxxim Medical, Inc.
10300 49/th/ Street North
Clearwater, FL 33762
Attn: President
If to Optionee: ________________________
________________________
________________________
Any party hereto may change the above designated address by notice to the other
party hereto of such new address given in accordance with this Section 9.
10. Joinder of Spouse. The Optionee's spouse is fully aware of,
-----------------
understands and fully consents and agrees to the provisions of this Agreement
and its binding effect upon any interest, community or otherwise, she may have
in any of the Option Shares or this
<PAGE>
Agreement, and she hereby evidences such awareness, understanding, consent and
agreement by execution of this Agreement.
11. Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, the Company shall not be required to issue any fractional shares, and
to the extent that the terms hereof would otherwise require such issuance of
fractional shares, the number of shares actually issued shall be rounded down to
the nearest whole share.
12. Transferability; Binding Effect. The Option shall be exercisable only
-------------------------------
by the persons described in Section 4. Subject to the foregoing, all covenants,
terms, agreements and conditions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the Company and the Optionee and their
respective heirs, executors, administrators, successors and assigns.
13. Termination.
-----------
(a) If the Optionee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be a
director of the Company, the option may be exercised by the director within
one (1) year after the date of such termination, but in no event later than
the Expiration Date.
(b) If the Optionee becomes permanently and totally disabled, as
hereinafter defined, while serving as a director of the Company, the Option
will automatically become exercisable in full and may be exercised by the
Optionee at any time before one (1) year after the date of disability or
the Expiration Date, whichever is earlier.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months. In the absence of any specific requirements
for this determination, the decision of the Company, as aided by any
physicians designated by the Company, shall be conclusive and the Company
shall send written notice to the Optionee of the determination that the
Optionee has become permanently and totally disabled.
(c) In the event that the Optionee dies while serving as a director
of the Company, the option will automatically become exercisable in full
and may be exercised by a legatee or legatees of the Optionee under the
Optionee's will, or by the Optionee's personal representatives or
distributees, at any time before one (1) year after the date of death or
the Expiration Date, whichever is earlier, and if not so exercised, the
Option shall thereupon terminate.
Nothing in (a), (b) or (c) shall extend the time for exercising the Option
granted pursuant to this Agreement beyond the Expiration Date.
<PAGE>
14. Shareholder Approval. The Option granted pursuant to this Agreement is
--------------------
subject to the approval of the Plan by the shareholders of the Corporation at
the 1999 Annual Meeting of Shareholders, as set forth in the Plan. In the event
that the Plan is not so approved, this Agreement shall automatically terminate
and the Optionee shall have no further rights hereunder.
15. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the Company and the Optionee and their respective heirs,
executors, administrators, successors and assigns.
16. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Florida, and the laws of the United States applicable in Florida.
17. Captions. The Section headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
the Agreement.
18. Counterparts. This Agreement may be executed in multiple original
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above, to be effective as of the Effective Date.
COMPANY:
MAXXIM MEDICAL, INC.,
a Texas corporation
By:___________________________________
Kenneth W. Davidson, President
OPTIONEE:
______________________________________
Optionee
______________________________________
Spouse of Optionee
<PAGE>
EXHIBIT 10.40
MAXXIM MEDICAL, INC.
1999 EMPLOYEE STOCK OPTION PLAN
THIS 1999 EMPLOYEE STOCK OPTION PLAN (this "Plan") is adopted by the Board
of Directors (the "Board of Directors") of MAXXIM MEDICAL, INC., a Texas
corporation (the "Company"), effective the 15th day of October, 1998 (the
"Adoption Date").
W I T N E S S E T H:
WHEREAS, the Company believes that allowing certain employees to obtain
shares of common stock, $.001 par value ("Common Stock"), of the Company by
granting stock options as hereinafter provided is beneficial to the initial and
continued success of the Company;
NOW, THEREFORE, the Company agrees to provide for the granting of stock
options to certain employees of the Company, subject to the following conditions
and provisions:
1. Purpose. The purpose of this Plan is to secure for the Company and
-------
its shareholders the benefits that flow from providing certain employees with
the incentive inherent in common stock ownership. The Company recognizes that
an employee stock option plan may aid in attracting and retaining employees of
exceptional ability because of the opportunity offered to acquire a proprietary
interest in the business of the Company.
2. Amount of Stock. The total number of shares of Common Stock to be
---------------
subject to options granted pursuant to this Plan shall not exceed 500,000
shares. This total number of shares shall be subject to appropriate and
automatic increase or decrease under Section 11 of this Plan (without the need
for further action on the part of the Board of Directors of the Company), in the
event of a stock dividend, or upon a subdivision, split-up, combination or
reclassification of, the shares purchasable under such options, as contemplated
in Section 11. In the event that options granted under this Plan shall lapse or
terminate without being exercised, additional options may be granted covering
the shares not purchased under such options.
3. Stock Option Committee. The Board of Directors shall from time to
----------------------
time appoint a Stock Option Committee (hereinafter called the "Committee") to,
among other duties, serve under this Plan. The Committee shall consist of
either:
(i) two or more persons, each of whom are Non-Employee Directors
within the meaning of Paragraph (b)(2)(i) of Rule 16b-3, or any successor
rule ("Rule 16b-3"), promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, as such term is
interpreted from time to time (hereinafter a "Non-Employee Director"); or
<PAGE>
(ii) the entire Board of Directors of the Company.
The Board of Directors shall, in its discretion, establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and shall have full authority and power to interpret and construe any provision
of the Plan or the terms and conditions of any option outstanding under the
Plan. Decisions of the Board of Directors shall be final, binding and
conclusive on all persons who have an interest in the Plan or any option
outstanding under the Plan.
4. Eligibility and Participation. Options may be granted pursuant to
-----------------------------
this Plan only to employees employed by the Company or any parent or a
subsidiary of the Company (such employees being hereinafter sometimes
collectively called "employees"). From time to time, the Committee shall select
the employees to whom options may be granted and shall determine the number of
shares to be covered by each option so granted. Future as well as present
employees (including employees who are directors) shall be eligible to
participate in this Plan. Directors who are not employees of the Company or a
parent or a subsidiary of the Company shall not be eligible to participate in
this Plan. The holder of any option granted pursuant to this Plan shall not
have any of the rights of a shareholder with respect to the shares covered by
the option until one or more certificates for such shares shall be delivered to
him upon the due exercise of the option.
5. Option Agreement. The terms and provisions of each option granted
----------------
under this Plan shall be as set forth in an Employee Stock Option Agreement
(hereinafter called an "Option Agreement"), between the Company and the employee
receiving such option in form and content substantially similar to the Option
Agreement attached hereto as Exhibit A. Each employee who is granted an Option
---------
shall be notified promptly of such grant and a written Option Agreement shall be
promptly executed and delivered by the Company and the employee, provided that
such grant of Options shall terminate if such Option Agreement is not signed by
such employee (or his or her attorney) and delivered to the Company within 60
days after the date such Option Agreement is delivered by the Company to such
employee.
6. Price. The purchase price per share of Common Stock purchasable under
-----
options granted pursuant to this Plan shall be determined by the Committee but
shall not be less than eighty-five percent (85%) of the fair market value of a
share of Common Stock at the time the options are granted or effective date of
such grant. Such fair market value shall be determined by the Committee without
regard to any restriction other than a restriction that, by its terms, will
never lapse. The full purchase price of shares purchased shall be paid upon
exercise of the option. The purchase price per share shall be subject to
adjustment under Section 11 of this Plan.
7. Exercise Period. Shares of Common Stock purchasable under any option
---------------
granted under this Plan will be purchasable as to twenty percent (20%) of such
shares one (1) year after the date of grant of such option, and shall become
purchasable as to an additional twenty percent (20%) of the shares upon the
expiration of each additional year thereafter until
<PAGE>
the fifth anniversary of the date of grant of such option, at which time the
option shall be exercisable in full.
8. Option Period. The Committee shall determine the maximum period of
-------------
time within which options granted pursuant to this Plan must be exercised after
the granting of such option, which shall be a period of time ending no later
than the tenth anniversary of the Adoption Date. The actual expiration date
stated in an Option Agreement is hereinafter called the "Expiration Date".
Notwithstanding any other provision of this Plan to the contrary, no option
shall be granted under this Plan effective after the fifth anniversary of the
Adoption Date.
9. Termination. Each Option Agreement will provide that:
-----------
(a) If the employee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be employed
by the Company, or a parent or subsidiary corporation of the Company, and prior
to such cessation, the employee was employed at all times from the date of the
granting of such option until the date of such cessation, the option may be
exercised by the employee (to the extent that the employee is entitled to do so
at the date of cessation) within sixty (60) days following the date of cessation
of employment, but in no event later than the Expiration Date; provided,
however, that if the employee is terminated for cause, the option will
immediately terminate.
(b) If the employee becomes permanently and totally disabled, as
hereinafter defined, while employed by the Company or a parent or subsidiary
corporation of the Company, and prior to such disability the employee was
employed at all times from the date of the granting of the option until the date
of disability, the option will automatically become exercisable in full and may
be exercised by the employee at any time within one (1) year after the date of
disability, but in no event later than the Expiration Date.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months. In the absence of any specific requirements for this determination, the
decision of the Committee, as aided by any physicians designated by the
Committee, shall be conclusive, and the Board of Directors shall send written
notice to the employee of the determination that he has become permanently and
totally disabled.
(c) In the event that the employee dies while employed by the Company or a
parent or subsidiary corporation of the Company, and prior to death the employee
was employed at all times from the date of the granting of the option until the
date of death, the option will automatically become exercisable in full and may
be exercised by a legatee or legatees of the employee under his will, or by his
personal representatives or distributees, at any time within one (1) year after
the date of death, but in no event later than the Expiration Date.
<PAGE>
10. Assignability. Each Option Agreement shall provide that the option
-------------
granted thereby shall not be transferable or assignable by the employee in any
form or fashion, and that the option may be exercised only by the employee
during his lifetime, or as otherwise expressly set forth in Exhibit A hereto.
---------
11. Changes in Capital Structure. Each option granted pursuant to this
----------------------------
Plan shall provide that if the option shall, subject to Section 12, be exercised
subsequent to any share dividend, stock split, reverse stock split, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
reorganization, or liquidation occurring after the date of the grant of the
option, as a result of which shares of any class have been issued in respect of
outstanding Common Stock or Common Stock has been changed into the same or a
different number of shares of the same or another class or classes without
payment of consideration therefor, then the employee or employees so exercising
the option shall receive, for the aggregate price paid upon such exercise, the
aggregate number and class of shares that, if Common Stock (as authorized at the
date of the grant of the option) had been purchased at the date of the grant of
the option for the same aggregate price (on the basis of the price per share set
forth in Section 6 hereof) and had not been disposed of, such employee or
employees would be holding, at the time of such exercise, as a result of such
purchase and all such share dividends, stock split, reverse stock split, split-
ups, recapitalizations, mergers, consolidations, combinations or exchanges of
shares, reorganizations, or liquidations; provided, however, that no fractional
share shall be issued upon any such exercise, and the aggregate price paid shall
be appropriately reduced on account of any fractional share not issued.
12. Change in Control. Notwithstanding anything in this Plan to the
-----------------
contrary, in the event of a Change in Control (as defined below), the
unexercised options outstanding under this Plan will automatically become
exercisable in full as of the effective date of such Change in Control. In the
event of a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, any
outstanding options hereunder may be terminated by the Company as of the
effective date of such dissolution, liquidation, merger or consolidation by
giving notice to each holder thereof of its intention to do so not less than ten
(10) days preceding such effective date and permitting the exercise until such
effective date, or the Expiration Date if earlier, of all of such outstanding
options. Notwithstanding the preceding sentence, if the Company is not the
surviving corporation as a result of the Company being reorganized or merged or
consolidated with another corporation while unexercised options are outstanding
under this Plan, the surviving corporation may assume the unexercised options
outstanding under this Plan or substitute new options in the surviving
corporation for the outstanding options; provided, however, that the excess of
the aggregate fair market value of the securities subject to the options
immediately after the substitution or assumption over the aggregate option price
of such shares is not less than the excess of the aggregate fair market value of
the Common Stock subject to the outstanding option immediately before such
substitution or assumption over the aggregate option price of such Common Stock.
The existence of this Plan or of options granted hereunder shall not in any way
prevent any Change in Control transaction, and no holder of options granted
under this Plan shall have the right to prevent any such transaction.
<PAGE>
"Change in Control" of the Company means and shall be deemed to have
occurred if and when (i) any "person" (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934) becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of directors do not constitute a majority of the Board
of Directors following such election; (iii) the shareholders of the Company
approve the dissolution or liquidation of the Company; (iv) the shareholders of
the Company approve an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not subsidiaries of the
Company, as a result of which less than 50% of the outstanding voting securities
of the surviving or resulting entity are, or are to be, owned by former
shareholders of the Company (excluding from the term "former shareholders" a
shareholder who is, or as a result of the transaction in question becomes, an
"affiliate", as that term is used in the Securities Exchange Act of 1934 and the
Rules promulgated thereunder, of any party to such merger, consolidation or
reorganization); or (v) the shareholders of the Company approve the sale of all
or substantially all of the Company's business and/or assets to a person or
entity which is not a subsidiary of the Company.
13. Registration Rights. The employees shall have no registration rights
-------------------
with respect to the shares of Common Stock issuable upon exercise of the options
granted under this Plan.
14. Sale of Stock After Exercise of Option. Any employee exercising any
--------------------------------------
option under the terms of this Plan will be required to agree that, unless the
shares obtained as a result of such exercise have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or may otherwise be
sold pursuant to an available exemption from such registration under the
Securities Act, such employee will not dispose of any such shares thereafter
without the prior approval of the Company.
Unless the Company files a registration statement with respect to the
shares issuable under the Plan, the Company shall require that a legend be
placed on any share certificates issued through the exercise of any option
granted under this Plan with respect to the foregoing restrictions. Such legend
shall be placed either on the front or back of such share certificates and shall
note that the shares are governed by this Plan.
This Plan shall be kept at the registered office of the Company and shall
be available for inspection by any appropriate party.
15. Amendment of the Plan. The Board of Directors may from time to time
---------------------
alter, amend, suspend or discontinue this Plan and make rules for its
administration.
16. Options Discretionary. The granting of options under this Plan shall
---------------------
be entirely discretionary, and nothing in this Plan shall be deemed to give any
employee of the Company
<PAGE>
or any parent or subsidiary of the Company any right to participate in this Plan
or to receive options.
No provision of this Plan or any Option Agreement evidencing any options
granted under this Plan shall confer any right upon any employee to be employed
by the Company or any parent or subsidiary of the Company for any period of
specific duration.
17. Shareholder Approval. This Plan will be submitted to the shareholders
--------------------
of the Company (the "Shareholders") for approval and shall be approved by a
majority vote of the shares represented in person or by proxy at a meeting at
which a quorum is present, at the annual meeting held within one year of the
Adoption Date. If the Plan is not approved by the Shareholders by such date,
the Plan and all options granted hereunder will automatically terminate.
18. Termination Of Plan. Unless terminated earlier, this Plan shall
-------------------
terminate effective five (5) years from the Adoption Date. Any option
outstanding under this Plan at the time of the termination of this Plan shall
remain in effect until such option shall have been exercised or the Expiration
Date thereof occurs, whichever is earlier.
19. Exhibits. Exhibit A (attached) is hereby incorporated into this Plan
-------- ---------
by reference.
<PAGE>
EXHIBIT "A"
MAXXIM MEDICAL, INC.
EMPLOYEE STOCK OPTION AGREEMENT
THIS EMPLOYEE STOCK OPTION AGREEMENT (this "Agreement"), dated to be
effective as of _____________, ______ (the Effective Date"), by and between
MAXXIM MEDICAL, INC., a Texas corporation (the "Company"), and
_______________________, an individual (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee is currently employed by the Company or by a parent
or a subsidiary of the Company;
WHEREAS, in consideration of the Optionee's record of employment or other
service with the Company or any subsidiary or parent and to provide the Optionee
with additional incentive to further the business of the Company, the Company
has agreed to grant the Optionee options to purchase shares of common stock,
$.001 par value ("Common Stock"), of the Company; and
WHEREAS, by granting the Optionee options to purchase shares of Common
Stock pursuant to the terms of this Agreement, the Company intends to carry out
the purposes set forth in the 1999 Employee Stock Option Plan of the Company
(the "Plan") adopted by the Board of Directors of the Company (the "Board of
Directors"); and
WHEREAS, the Company and the Optionee desire to set forth the terms and
conditions of such options to purchase Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the option
---------------
(the "Option") to purchase all or any part of an aggregate of __________________
(_____) shares of Common Stock (such shares, as increased or decreased in
accordance with Section 10 hereof, being referred to herein as the "Option
Shares") for a purchase price of ______________ and ___/100 Dollars ($_____) per
share (the "Exercise Price"), upon the additional terms and conditions
hereinafter set forth.
2. Availability of Option Shares and Term of Option. Subject to the
------------------------------------------------
fulfillment by Optionee of the conditions set forth in Sections 6 and 7 hereof
and also subject to the terms of Sections 10 and 15 hereof, the Option shall be
first exercisable as to twenty percent (20%) of the Option Shares one (1) year
after the Effective Date, and shall become exercisable as to an additional
twenty percent (20%) of the Option Shares upon the expiration of each additional
year thereafter until the fifth anniversary of the Effective Date, at which time
the Option shall be exercisable in full. The Option shall expire and terminate
as to any Option Shares not
<PAGE>
purchased by the Optionee on or before the sixth anniversary of the Effective
Date (the "Expiration Date"), subject to earlier termination as set forth in
Section 15.
3. Method of Exercising the Option. Subject to the limitations contained
-------------------------------
in Section 2, the Option shall be exercised by the Optionee delivering to the
Company, on or before to the Expiration Date or the date of any earlier
termination pursuant to Section 15 (i) written notice from the Optionee stating
that the Optionee is exercising the Option and specifying the number of Option
Shares that the Optionee desires to purchase ("Notice"), and (ii) a check
payable to the order of the Company in an amount equal to the then current
Exercise Price multiplied by the number of Option Shares that the Optionee has
indicated he desires to purchase in the Notice (the "Payment"). The Option may
be exercised as to all, or any whole number, of the Option Shares exercisable as
of the date of the Notice. The failure of the Optionee to exercise the Option
as to all of the Option Shares available for exercise as of the date of the
Notice shall not be deemed to be a waiver or forfeiture of the Optionee's right
to later exercise the Option as to any Option Shares not previously purchased.
For purposes of Section 2 hereof, the exercise of the Option to purchase the
Option Shares specified in the Notice shall be deemed to have taken place on the
date that Notice and Payment are actually received by the Company in accordance
with this Section 3.
4. Transferability of Option. The Option shall be exercisable (i) during
-------------------------
the Optionee's lifetime, only by the Optionee, or his guardian or legal
representative, or (ii) in the event of his death, by his heirs or legatees in
accordance with his will or the laws of descent and distribution (but only to
the extent the Option would be exercisable by the Optionee under Section 2 or as
set forth in Section 15), and shall not otherwise be transferable or assignable,
in whole or in part.
5. Payment of Taxes Upon Exercise. The Optionee understands and
------------------------------
acknowledges that under currently applicable law, the Optionee may be required
to include in his taxable income, at the time of exercise of the Option, the
amount by which the value of the Option Shares purchased (the "Exercise Shares")
exceeds the Exercise Price paid. The Optionee hereby authorizes the Company to
withhold Exercise Shares of a value equivalent to the amount of tax required to
be withheld by the Company out of any taxable income derived by the Optionee
upon exercise of the Option; provided, however, that the Optionee may, in the
alternative, in order to satisfy such withholding requirement, deliver to the
Company cash or other shares of Common Stock owned by the Optionee.
6. Covenant Not To Compete. The Optionee agrees that for so long as he
-----------------------
is employed by the Company and for ________ (___) ________ thereafter, he shall
not, directly or indirectly, for his own account or for the account of others
(i) engage, within any market area served by the Company, as principal, agent,
trustee or through the agency of any corporation, partnership, association or
agency, in any business which is a Competitor, as hereinafter defined, or (ii)
own more than five percent (5.0%) of the outstanding capital stock, or be a
member or employee of any partnership which is a Competitor, or an owner or
employee of any Competitor. For purposes of this Section 6, a business will be
deemed to be a "Competitor" if its business involves the manufacture,
distribution or marketing of any physical therapy, home pain management or
hospital products of the type, or competitive with, any such product
manufactured or distributed by the Company. The Optionee further agrees that
for so long as he is employed by the Company, and for ________ (___) ________
thereafter, he will not, either directly or indirectly, through any person,
firm, association, or
<PAGE>
corporation with which he is now or may hereafter become associated, cause or
induce any present or future employee of the Company to leave the employ of the
Company to accept employment with the Optionee or with any Competitor. The
parties understand and agree that if any of the restrictions placed upon the
Optionee herein relating to time, geographical area or scope of activity are
deemed more extensive than is necessary to protect the good will or other
business interests of the Company under the laws of the State of Florida (or any
other jurisdiction in which the employee may be actually employed and by reason
of which the law of such other jurisdiction properly applies with respect to
interpretation of Sections 6 or 7 hereof), then the parties hereto agree to
amend the terms hereof to such time, geographical area and scope of activity and
alter the degree and extent of such provisions by the minimal amount of
amendment or alteration necessary to bring such provisions within the ambit of
enforceability within the State of Florida. For purposes of Sections 6 or 7
hereof, the term "Company" shall include any parent or subsidiary of the
Company. For purposes of this Agreement, the term "subsidiary" shall mean any
subsidiary corporation, partnership, joint venture or other similar entity or
vehicle of which the Company owns twenty-five percent (25%) or more of the
equity or other ownership interest therein.
7. Nondisclosure of Company Secrets. The Optionee acknowledges that in
--------------------------------
the course of his employment or other relationship with the Company, he has had
and may continue to have access to certain trade secrets and proprietary
information of the Company, know-how, programs, lists of customers, information
regarding inventions, whether patentable or not, tools, machines, mechanisms,
and fixtures which are secret and used in the business of the Company, items and
processes, whether of design, manufacturing or service, information regarding
employee compensation, techniques of production or other information which may
yield greater efficiency or capacity of production, methods, techniques, and
systems concerning design, pricing or manufacturing which are proprietary to the
Company or to the Company's customers or suppliers, or which is developed by the
Optionee in the performance of his duties, and other confidential information
and knowledge concerning the business of the Company (hereinafter collectively
referred to as the "Information") which the Company desires to protect. The
Optionee understands that the Information is confidential and has been or will
be received or learned by him in confidence, and the Optionee agrees that unless
and until such information shall become a matter of public knowledge, he will
not reveal any such Information to any third party for any reason or under any
circumstances, either during or subsequent to his employment by the Company,
other than in the ordinary course of his duties for the benefit of the Company,
or as required by applicable law.
8. Investment Representation/Securities Law Requirements. The Optionee
-----------------------------------------------------
represents that the Option Shares available for purchase by the Optionee under
this Agreement will be acquired only for investment and not with a view toward
resale or distribution. The Optionee agrees and understands that the Option
Shares may be restricted securities as defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and, in such case,
may not be sold, assigned or transferred, unless the sale, assignment or
transfer of such shares is registered under the Securities Act and applicable
blue sky laws, as now in effect or hereafter amended or under applicable
exemptions therefrom. In the case of any sale under such an exemption, the
Company will require an opinion of counsel in form and substance satisfactory to
the Company from counsel acceptable to the Company that such registrations are
not required. The Optionee further understands and agrees that, unless issued
pursuant to an effective registration statement under the Securities Act, the
following legend shall be set forth on each certificate representing Option
Shares:
<PAGE>
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 or under the blue sky laws of any state, and may
not be sold, assigned or transferred except upon such registration or upon
receipt by the Company of an opinion of counsel in form and substance
satisfactory to the Company from counsel acceptable to the Company that
such registrations are not required for such sale, assignment or transfer."
9. No Rights as Shareholder. The Optionee shall not have any rights as a
------------------------
shareholder with respect to any of the Option Shares until the date of issuance
by the Company of a stock certificate to the Optionee for such shares. Except
as otherwise provided in Section 10 hereof, the Optionee shall not be entitled
to any dividends, cash or otherwise, or any adjustment of the Exercise Price of
any of the Option Shares for such dividends, if the record date therefor is
prior to the date of issuance of such stock certificate. Upon valid exercise of
the Option by the Optionee, the Company agrees to cause a valid stock
certificate for the number of Option Shares then purchased to be issued and
delivered to the Optionee within seven (7) business days.
10. Corporate Proceedings of the Company. Notwithstanding anything in
------------------------------------
this Agreement to the contrary, in the event of a Change in Control (as defined
in the Plan), the Option will automatically become exercisable in full as of the
effective date of such Change in Control. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation, the Option may be terminated by the Company as of
the effective date of such dissolution, liquidation, merger or consolidation by
giving notice to Optionee of its intention to do so not less than ten (10) days
preceding such effective date and permitting the exercise until such effective
date, or the Expiration Date if earlier, of the Option. Notwithstanding the
preceding sentence, if the Company is not the surviving corporation as a result
of the Company being reorganized or merged or consolidated with another
corporation while the Option is outstanding, the surviving corporation may
assume the Option or substitute a new option in the surviving corporation for
the Option; provided, however, that the excess of the aggregate fair market
value of the securities subject to the options immediately after the
substitution or assumption over the aggregate option price of such shares is not
less than the excess of the aggregate fair market value of the Option Shares
immediately before such substitution or assumption over the Exercise Price of
Option Shares. The existence of the Option shall not in any way prevent any
Change of Control transaction, and Optionee shall have no right to prevent any
such transaction.
If the Option shall be exercised subsequent to any share dividend, stock
split, reverse stock split, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization, or liquidation occurring
after the Effective Date, as a result of which shares of any class have been
issued in respect of outstanding Common Stock or Common Stock has been changed
into the same or a different number of shares of the same or another class or
classes without payment of consideration therefor, then the Optionee shall
receive, for the Exercise Price paid upon such exercise, the aggregate number
and class of shares that, if the Option Shares had been purchased at the
Effective Date and had not been disposed of, the Optionee would be holding, at
the time of such exercise, as a result of such purchase and all such share
dividends, stock split, reverse stock split, split-ups, recapitalizations,
mergers, consolidations, combinations or exchanges of shares, reorganizations,
or liquidations;
<PAGE>
provided, however, that no fractional share shall be issued upon any such
exercise, and the Exercise Price shall be appropriately reduced on account of
any fractional share not issued.
The issuance by the Company of shares of stock of any class of securities
convertible into shares of stock of any class, including Common Stock, or the
issuance by the Company of Common Stock for cash, property or services rendered,
either upon direct sale or upon the exercise of rights, options or warrants to
subscribe therefor, or the conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of shares of Common Stock then subject to the Option.
11. Notices. All notices, demands and other communications required or
-------
permitted hereunder, shall be deemed to have been properly given or delivered
when delivered personally or sent by certified or registered mail, return
receipt requested with all postage fully prepaid, addressed to the respective
parties hereto as follows:
If to the Company: Maxxim Medical, Inc.
10300 49th Street North
St. Petersburg, FL 33762
Attn: President
If to Optionee: _________________________
_________________________
_________________________
Any party hereto may change the above designated address by notice to the other
party hereto of such new address given in accordance with this Section 11.
12. Joinder of Spouse. The Optionee's spouse is fully aware of,
-----------------
understands and fully consents and agrees to the provisions of this Agreement
and its binding effect upon any interest, community or otherwise, he or she may
have in any of the Option Shares or this Agreement, and he or she hereby
evidences such awareness, understanding, consent and agreement by execution of
this Agreement.
13. Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, the Company shall not be required to issue any fractional shares, and
to the extent that the terms hereof would otherwise require such issuance of
fractional shares, the number of shares actually issued shall be rounded down to
the nearest whole share.
14. Transferability; Binding Effect. The Option may be exercised only by
-------------------------------
the persons described in Section 4. Subject to the foregoing, all covenants,
terms, agreements and conditions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the Company and the Optionee and their
respective heirs, executors, administrators, successors and assigns.
15. Termination.
-----------
(a) If the Optionee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be employed
by the Company, or a parent or
<PAGE>
subsidiary corporation of the Company, and prior to such cessation, the Optionee
was employed at all times from the date of the granting of the Option until the
date of such cessation, the Option may be exercised by the Optionee (to the
extent that the Optionee is entitled to do so at the date of cessation) within
sixty (60) days following the date of cessation of employment, but in no event
later than the Expiration Date; provided, however, that if the Optionee is
terminated for cause, the Option will immediately terminate.
(b) If the Optionee becomes permanently and totally disabled, as
hereinafter defined, while employed by the Company or a parent or subsidiary
corporation of the Company, and prior to such disability the Optionee was
employed at all times from the date of the granting of the Option until the date
of disability, the Option will automatically become exercisable in full and may
be exercised by the Optionee at any time within one (1) year after the date of
disability, but in no event later than the Expiration Date.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months. In the absence of any specific requirements for this determination, the
decision of the Company, as aided by any physicians designated by the Company,
shall be conclusive, and the Company shall send written notice to the Optionee
of the determination that the Optionee has become permanently and totally
disabled.
(c) In the event that the Optionee dies while employed by the Company or a
parent or subsidiary corporation of the Company, and prior to death the Optionee
was employed at all times from the date of the granting of the Option until the
date of death, the Option will automatically become exercisable in full and may
be exercised by a legatee or legatees of the Optionee under the Optionee's will,
or by the Optionee's personal representatives or distributees, at any time
within one (1) year after the date of death, but in no event later than the
Expiration Date.
16. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the Company and the Optionee and their respective heirs,
executors, administrators, successors and assigns.
17. Governing Law. This Agreement shall be governed by the laws of
-------------
Florida, and the laws of the United States applicable in Florida.
18. Captions. The Section headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
the Agreement.
19. Counterparts. This Agreement may be executed in multiple original
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above, to be effective as of the Effective Date.
COMPANY:
<PAGE>
MAXXIM MEDICAL, INC.,
a Texas corporation
By:____________________________________
Kenneth W. Davidson, President
OPTIONEE:
_______________________________________
_______________________________________
Spouse of Optionee
