Form 8-K HAEMONETICS CORP For: May 09
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 6, 2016
HAEMONETICS CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts | 1-14041 | 04-2882273 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
400 Wood Road, Braintree MA | 02184 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code 781-848-7100
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.05. Costs Associated with Exit or Disposal Activities.
On May 6, 2016, Haemonetics Corporation committed to a plan for repositioning our organization and cost structure to optimize growth and profitability. This involves the reduction in the number of employees and creation of efficiencies in sales, administration and operations.
We estimate these actions will result in total pre-tax expenses of approximately $26 million, and that nearly all of these charges will result in future cash outlays.
The following table provides a summary of our estimate by major type of cost:
Type of Cost | Total Expected Amounts | |
Restructuring charges: | ||
Severance and Separation benefits | $17 million | |
Restructuring-related expenses: | ||
Exit Costs | $4 million | |
Third-party Services and Other | $5 million | |
Total | Approximately $26 million | |
We estimate that we will record substantially all these charges during fiscal 2017. We expect to record the majority of the restructuring charges and related costs through operating expense and cost of goods sold. The restructuring charges relate primarily to termination benefits recorded pursuant to FASB Statement No. 112, Employer’s Accounting for Postemployment Benefits and FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(c)
Appointment of Christopher Simon as President and Chief Executive Officer
On May 9, 2016, Haemonetics Corporation (the “Company”) announced that its Board of Directors appointed Christopher Simon as President and Chief Executive Officer of the Company, effective May 16, 2016.
Mr. Simon will succeed Ronald Gelbman, who has been serving as interim Chief Executive Officer since September of 2015. Mr. Gelbman will continue to serve as a member of the Haemonetics Board of Directors.
Mr. Simon, 52, currently serves as a Senior Partner of McKinsey & Company in Global Medical Products Practice. Mr. Simon has been a consultant with McKinsey & Company since 1993, and prior to that, he served in commercial roles with Baxter Healthcare Corporation. He has recently been the Lead Partner for McKinsey & Company’s current strategy review with Haemonetics.
In connection with his appointment, Mr. Simon entered into an Employment Agreement which provides for an annual base salary of $820,000 and participation in the Company’s annual bonus plan, commencing in the Company’s 2017 fiscal year, with a target amount in fiscal 2017 of 100% of his base salary and a maximum payment of 200% of his base salary. The Employment Agreement also provides for restrictive covenants relating to non-competition, non-solicitation, non-disclosure of confidential information and non-disparagement, which apply during the term of his employment and for varying periods thereafter.
Mr. Simon will also receive an initial equity grant valued at $1.5 million and initial annual equity grant valued at $3.75 million, each consisting of 50% performance share units, 25% restricted stock units and 25% non-qualified stock options. The performance share units shall vest, if at all, on the last day of a three year performance period conditioned on Mr. Simon’s continued employment with the Company and the achievement of the performance conditions established by the Company’s Compensation Committee. Assuming Mr. Simon’s continued employment with the Company, the restricted stock units and stock options will vest over a four year period at a rate of 25% upon each of the first four anniversaries of the grant date. The restricted stock units and the exercise price of the stock options will be determined by the fair market value of the Company’s common stock at the time of grant. All other terms and conditions of these equity awards will be consistent with the Company’s equity award agreements filed by the Company as exhibits to the 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 28, 2015. Any future equity grants are at the discretion of the Company’s Compensation Committee.
The Employment Agreement also provides that if Mr. Simon purchases up to $2 million of the Company’s stock during the first six months of his employment, the Company will grant him performance share units equal to the number of shares purchased. The performance share units granted under this award shall vest, if at all, on the last day of a three year performance period. The grant would be conditioned upon Mr. Simon’s continued employment with the Company and the achievement of the performance conditions established by the Compensation Committee.
Mr. Simon also entered into an Executive Severance Agreement which provides that if his employment is terminated by the Company without “cause” or by Mr. Simon for “constructive termination”, as each is defined, or the Company does not renew the Employment Agreement, the Company will provide severance pay in an amount equal to two times his annual base salary, the cash equivalent of two years of the Company’s contribution to medical, dental, life insurance and disability coverage for the executive and his dependents ("welfare benefits") as well as certain outplacement benefits.
Mr. Simon has also entered into a Change in Control Agreement with the Company, the terms of which are substantially similar to the Change of Control Agreements in place between the Company and its other executive officers, and summarized under the headings “Double Trigger Change of Control Agreements” and “Potential Payments Upon Termination or Change of Control” in the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on June 11, 2015 (the “2015 Proxy Statement”). Mr. Simon’s Change of Control Agreement provides that, in the event his employment is terminated by the Company without cause or by Mr. Simon for constructive termination, or the Company does not renew the Employment Agreement, during the two year period following a defined change of control, Mr. Simon will be entitled to receive (1) the equivalent of 2.99 years base salary and target annual incentive compensation, (2) three years of welfare benefits, (3) certain o
utplacement benefits, and (4) except as otherwise provided in his equity award grant agreements, (a) acceleration of vesting of any unassumed equity awards that have time-based only vesting and (b) prorated acceleration of any equity awards that have performance-based vesting based upon achievement of the relevant performance goals as of the change of control.
The Company will reimburse Mr. Simon for the cost of housing in the Boston area, up to a maximum of $7,000 per month and travel between Executive’s primary residence and the Boston area, up to a maximum of $1,500 per month, in each case, for up to eighteen months. Mr. Simon also will participate in all other elements of the Company’s employee benefit plans for the Company’s senior executives, which are outlined in the 2015 Proxy Statement.
The selection of Mr. Simon was not pursuant to any arrangement or understanding with respect to any other person. In addition, there are no family relationships between Mr. Simon and any director or other executive officer of the Company. The Company engaged Mr. Simon’s former employer, McKinsey & Company, to assist on its current strategy review. McKinsey and Company has been paid, or the Company has accured for, fees totaling approximately $3.9 million since the beginning of fiscal 2016.
The foregoing descriptions of the Employment Agreement, the Executive Severance Agreement and the Change of Control Agreement do not purport to be complete and are qualified in their entirety by the contents of the agreements, copies of which are attached hereto as Exhibit 10.1, Exhibit 10. 2 and Exhibit 10.3, respectively and are incorporated into this Item 5.02 by reference. The descriptions of Mr. Simon’s equity awards are subject to the terms of the respective equity grant agreements and the Company’s 2005 Long-Term Incentive Compensation Plan, and are also subject to the Company’s clawback policies as described in the 2015 Proxy Statement under “Recapture Policy”.
Section 9 - Financial Statements and Exhibits | ||||||
Item 9.01. Financial Statements and Exhibits | ||||||
(d) | Exhibits: | |||||
Exhibit Number | Exhibit Description | |||||
10.1 | Employment Agreement dated May 9, 2016 between Christopher Simon and Haemonetics Corporation. | |||||
10.2 | Executive Severance Agreement dated May 9, 2016 between Christopher Simon and Haemonetics Corporation. | |||||
10.3 | Change in Control Agreement dated May 9, 2016 between Christopher Simon and Haemonetics Corporation. | |||||
99.1 | Press Release Regarding Fiscal 2017 Guidance dated May 9, 2016. | |||||
99.2 | Press Release Regarding Appointment of Chief Executive Officer dated May 9, 2016. | |||||
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 hereunto duly authorized.
HAEMONETICS CORPORATION | ||
(Registrant) | ||
Date: May 9, 2016 | By | /s/ Sandra Jesse |
Sandra Jesse | ||
Executive Vice President, Chief Legal Officer | ||
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”), effective as of the Start Date (defined below) is by and between Christopher A. Simon (the “Executive”) and Haemonetics Corporation (the “Company”) (together, the “Parties”).
Introduction
WHEREAS, the Parties have agreed that the Executive shall serve as the President and Chief Executive Officer (the “CEO”) of the Company on the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.Term. The Company shall employ the Executive for a term commencing on May 16, 2016 (the “Start Date”) and continuing until the second anniversary of the Start Date unless earlier terminated pursuant to Section 5 below, provided that, on such second anniversary of the Start Date and each annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), this Agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless (i) earlier terminated pursuant to Section 5 below, or (ii) either party provides written notice of its intention not to extend the term of this Agreement at least ninety (90) days prior to the applicable Renewal Date (the “Term”).
2. Position and Duties. The Executive shall serve as the President and CEO. The Executive will be in general and active charge of the day-to-day business and affairs of the Company, and shall be its chief policy making officer (in addition to such other powers, roles and executive duties as may be prescribed by the Board or the bylaws of the Company from time to time). The Executive shall report to the Board of Directors of the Company (the “Board”). The Executive will report to and work at the Company’s headquarters, currently located at 400 Wood Road, Braintree, MA 02184.
3. Full Time and Best Efforts. The Executive shall use his best and full efforts to promote the interests of the Company and shall devote substantially all business time to the faithful performance of his duties and responsibilities hereunder. The Executive may engage in other community and civic activities as long as such activities do not unreasonably interfere with the performance of his duties hereunder, and may also continue to serve on the boards of the entities listed on Appendix A hereto. The Executive shall not serve on any other boards during the Term without the prior approval of the Board, which shall not be unreasonably withheld.
4. Compensation and Benefits. The Executive shall receive compensation and benefits during the Term as follows:
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(a) Base Salary. The Executive shall receive a base salary at an annual rate equal to $820,000, payable in equal installments pursuant to the Company’s normal payroll practices. Executive’s base salary will be reviewed annually by the Compensation Committee of the Board (the “Compensation Committee”) for any increase.
(b) Bonus. Executive shall be eligible to participate in the Company’s FY 2017 Worldwide Bonus Plan (the “2017 Bonus Plan”), with a target bonus potential of 100%, and a maximum bonus potential of 200%, of Executive’s base salary based on achievement of select metrics approved by the Compensation Committee, such as financial metrics and individual performance ratings, and pro-rated for the period from the Start Date through the end of the plan year. The payment of any bonus for fiscal year 2017 will be determined in accordance with the terms of the 2017 Bonus Plan, except that notwithstanding anything to the contrary stated in the 2017 Bonus Plan, the Compensation Committee may exercise any discretion reserved under the plan.
(c) Equity Compensation.
i.Sign-On Equity Award. Executive will receive a sign-on equity award with a grant value of $1,500,000 (the “Sign-On Equity Award”) as soon as reasonably practicable following the Start Date. The award will be granted in the form of 50% performance share units (the “Sign-On PSUs”), 25% restricted stock units (the “Sign-On RSUs”) and 25% stock options (the “Sign-On Stock Options”). The Sign-On PSUs shall vest, if at all, on the last day of a three year performance period that begins on the date of grant (the “Sign-On PSU Performance Period”) conditioned upon Executive’s continued employment with the Company and the achievement of the performance conditions (the “Sign-On PSU Performance Conditions”) as set forth by the Compensation Committee in the Sign-On Equity Award. Assuming Executive’s continued employment with the Company, the Sign-On RSUs and the Sign-On Stock Options will vest over a four year period at a rate of 25% upon each of the first four anniversaries of the date of grant. The Sign-On RSUs and the exercise price of the Sign-On Stock Options will be determined by the fair market value of the Company’s common stock at the time of grant. All other terms and conditions of the Sign-On Equity Award shall be consistent with the standard equity award agreements in use by the Company on the Start Date.
ii.Annual Equity Awards. Executive will be eligible to receive annual equity awards at a time and with such terms as determined by the Compensation Committee in its discretion (each such award, an “Annual Equity Award”). The Executive will receive an initial annual equity award with a grant value of $3,750,000 at target (the “Initial Annual Equity Award”) as soon as reasonably practicable following the Start Date. The actual payout, however, may be higher or lower (or zero) as determined in accordance with the terms of the award. The Initial Annual Equity Award will be in the form of 50% performance share units, 25% restricted stock units and 25% stock options. Assuming Executive’s continued employment with the Company, the restricted stock units and stock options granted to Executive pursuant to the Initial Annual Equity Award will vest over a four year period at a rate of 25% upon each of the first four anniversaries of the date of grant. The performance share units shall vest, if at all, on the last day of a three year performance period conditioned upon Executive’s continued
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employment with the Company and the achievement of the performance conditions set forth by the Compensation Committee in the Initial Annual Equity Award. All other terms and conditions of the Initial Annual Equity Award shall be consistent with the standard equity award agreements in use by the Company on the Start Date. Except as otherwise provided by the Compensation Committee, all subsequent Annual Equity Awards will be granted and will vest consistent with all other executive officer grants and vesting schedules.
iii.Matching Equity Award. If Executive chooses to make a Qualifying Purchase using his own funds, the Company will make a Matching Equity Award to Executive as soon as reasonably practicable following the Qualifying Purchase. The term “Qualifying Purchase” means the open market purchase of up to $2,000,000 of Company common stock during a five consecutive trading day period, which purchase is completed during the six-month period following the Start Date. The term “Matching Equity Award” means a grant of performance share units equal to the number of shares purchased pursuant to a Qualifying Purchase. The performance share units granted pursuant to a Matching Equity Award shall vest, if at all, on the last day of a three year performance period that begins on the date of grant conditioned upon Executive’s continued employment with the Company and the achievement of the performance conditions set forth by the Compensation Committee in the Matching Equity Award. Within thirty (30) days following the Start Date, the Compensation Committee shall establish and communicate to Executive the applicable performance conditions. Only one Qualifying Purchase by Executive shall be eligible for a Matching Equity Award.
The descriptions of Executive’s equity awards in this Section 4(c) are subject to the terms of the respective equity grant agreements and the Company’s 2005 Long-Term Incentive Compensation Plan, and are also subject to the Company’s clawback policies as amended from time to time.
Executive will be required to meet the Company’s share ownership guidelines for executives as amended from time to time which have been established to align the Company’s interests with those of its shareholders in a tangible way. Commencing on the Start Date, Executive is expected to progress towards an ownership level of five times his base salary within five years.
(d) Benefits. The Executive shall be entitled to participate in all of the Company’s standard employee benefit plans, policies and programs as are generally available to other executive employees of the Company from time to time, in accordance with and subject to the then existing terms and conditions of such benefit plans, policies and programs. In addition, the Company shall pay for the cost of an annual physical exam for Executive to be performed by Executive’s personal physician. Executive will receive four (4) weeks of paid vacation per year, accrued on a pro-rata basis and subject to the terms of the Company’s regular vacation policies.
(e) Expenses.
i. The Company will reimburse Executive for the cost of (1) housing in the Boston area, up to a maximum of $7,000 per month and (2) travel between Executive’s primary residence and the Boston area, up to a maximum of $1,500 per month, subject to
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compliance with the Company’s reimbursement policies then in effect. This benefit will expire eighteen (18) months after the Start Date or once Executive has relocated to the Boston area, whichever is sooner.
ii. The Company shall pay for the cost of air travel by Executive on behalf of the Company, up to the cost of a business-class fare for international air travel, the cost of a first-class fare for domestic air travel for a scheduled duration of two hours or more, and the cost of an economy-class fare for domestic air travel for a scheduled duration of less than two hours.
iii. The Company shall reimburse Executive for the cost of attorneys’ fees incurred by Executive in connection with the preparation and negotiation of this Agreement, up to a maximum of $20,000. In addition, the Company shall reimburse Executive for the cost of attorneys’ fees incurred by Executive in connection with Executive’s efforts to enforce this Agreement, up to a maximum of $20,000.
iv. In addition to the foregoing, Executive shall be entitled to reimbursement of all reasonable expenses incurred in the ordinary course of business on behalf of the Company, subject to compliance with the Company’s reimbursement policies then in effect.
All Company reimbursements of Executive’s expenses shall be made in the ordinary course of business and subject to compliance with the Company’s reimbursement policies then in effect and, for purposes of compliance with Section 409A (as defined in Section 23), in no event later than the end of the year following the year in which the expenses were incurred.
(f) Relocation Assistance. As a condition of employment, Executive shall be required to relocate his primary residence to the Boston area within eighteen (18) months following the Start Date. Executive will be entitled to participate in the Company’s standard relocation package.
(g) Withholding. The Company may withhold from compensation payable to the Executive all applicable federal, state and local withholding taxes.
5. Termination.
(a) General. The Executive’s employment hereunder may be terminated at any time for any reason, upon written notice from the Board. The Executive may also terminate his employment hereunder for any reason, upon sixty (60) days prior written notice to the Board.
(b) Effects of Termination. Upon termination for any reason hereunder, the Company shall pay to the Executive any unpaid salary and accrued, unused vacation owed as of the effective date of termination. The Executive shall also be reimbursed for all expenses owed under Section 4(e) above.
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(c) Severance. In addition, the Company shall provide Executive with such severance (if any) as he may be entitled to under the terms set forth in the Executive Severance Agreement (the “Executive Severance Agreement”) or the Change in Control Agreement (the “Change in Control Agreement”) between the Company and the Executive, each effective as of the Start Date, as applicable. The Executive Severance Agreement and the Change in Control Agreement are hereby incorporated by reference. Neither the Executive Severance Agreement nor the Change in Control Agreement may be terminated by the Company for any reason for as long as Executive continues to serve as the CEO of the Company. These agreements shall be enforceable in accordance with their terms for any period following Executive’s separation from service to the Company until all payments and benefits provided thereunder, if any, have been paid or delivered in full. For the avoidance of doubt, no severance benefits shall be paid or provided by the Company to Executive under the Executive Severance Agreement, the Change in Control Agreement, or otherwise if Executive’s employment hereunder is terminated (i) by the Company for Cause or (ii) by Executive, including by Executive’s notification of the Company of Executive’s intention not to renew the term of this Agreement, absent the occurrence of Constructive Termination (as “Cause” and “Constructive Termination” are defined in the Executive Severance Agreement or Change in Control Agreement, as applicable).
6. Confidential Information. The Executive agrees that during the Executive’s employment with the Company, whether or not under this Agreement, and at all times thereafter:
(a) The Executive will not at any time, directly or indirectly, disclose or divulge any Confidential Information (as hereinafter defined), except as required in connection with the performance of the Executive’s duties for the Company, and except to the extent required by law, subpoena or court order (but only after the Executive has provided the Company with reasonable notice and opportunity to take action against any legally required disclosure). As used herein, “Confidential Information” means all trade secrets and all other information of a business, financial, marketing, technical or other nature relating to the business of the Company including, without limitation, any customer or vendor lists, financial statements and projections, know-how, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, computer hardware, software programs, business plans and projects pertaining to the Company and including any information of others that the Company has agreed to keep confidential; provided, that Confidential Information shall not include any information that has entered or enters the public domain through no fault of the Executive.
(b) The Executive shall make no use whatsoever, directly or indirectly, of any Confidential Information at any time, except as required in connection with the performance of the Executive’s duties for the Company.
(c) Upon the Company’s request at any time and for any reason, the Executive shall immediately deliver to the Company all materials (including all soft and hard copies) in the Executive’s possession that contain or relate to Confidential Information and all other Company documents and property.
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(d) All Developments made by the Executive, either alone or in conjunction with others, at any time or at any place during the Executive’s employment with the Company, whether or not reduced to writing or practice during such period of employment, shall be and hereby are the exclusive property of the Company without any further compensation to the Executive. In addition, without limiting the generality of the prior sentence, all Developments which are copyrightable work by the Executive are intended to be “work made for hire” as defined in Section 101 of the Copyright Act of 1976, as amended, and shall be and hereby are the property of the Company. “Developments” means any and all inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein that (i) relate to the business in which the Company is engaged or in which the Company intends to engage during Executive’s employment with the Company, (ii) are created or improved in whole or in part by using any Company resources, data, facilities or equipment, or (iii) are created or improved within the scope of Executive’s employment.
(e) The Executive shall promptly disclose the Developments to the Company. If any Development is not the property of the Company by operation of law, this Agreement or otherwise, the Executive will, and hereby does, assign to the Company all right, title and interest in such Development, without further consideration, and will assist the Company and its nominees in every way, at the Company’s expense, to secure, maintain and defend the Company’s rights in such Development. The Executive shall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (or other intellectual property registrations or filings) of the United States or any foreign country which the Company desires to file and relates to any Development. The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as such Executive’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with an interest and shall survive the Executive’s death or incapacity), to act for and in the Executive’s behalf to execute and file any such applications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, other intellectual property registrations or filings or such other similar documents with the same legal force and effect as if executed by the Executive. Executive waives all claims to moral rights in the Developments.
Nothing in this Agreement, however, precludes the Executive from communicating with any government agency including but not limited to the Securities and Exchange Commission, the Department of Labor or the Equal Employment Opportunity Commission.
7. Restrictive Covenants. The Executive acknowledges that (i) the services to be performed by the Executive under this Agreement are of a special, unique, unusual, extraordinary, and intellectual character and (ii) the provisions of this Section 7 are reasonable and necessary to protect the Company’s business, goodwill and Confidential Information. The Executive therefore agrees that during the Executive’s employment with the Company, whether or not under this Agreement, and for a period of two years after expiration or termination of Executive’s employment with the Company for any reason whatsoever:
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(a) the Executive will not, directly or indirectly, individually or as a consultant to, or an employee, officer, director, manager, stockholder, partner, member, investor, lender or other owner or participant in any business entity, other than the Company, engage in or assist any other person or entity to engage in any business which competes with any business in which the Company is engaging or in which the Company plans to engage, during or at the time of termination of the Executive’s employment, anywhere in the United States or anywhere else in the world where the Company does business or plans to do business during the Executive’s employment;
(b) the Executive will not, directly or indirectly, (i) solicit, divert or take away, or attempt to solicit, divert or take away, the business or relationship of the Company with any of its customers, clients, distributors, dealers, referral sources, business partners, suppliers, vendors, service providers, consultants, lenders, investors, landlords, licensors or attorneys or any other person or entity with whom the Company does business (collectively, “Business Partners”), or (ii) otherwise interfere with the Company’s business relationship with any of its Business Partners;
(c) the Executive will not knowingly, directly or indirectly, solicit, recruit, hire or engage, or otherwise interfere with the business relationship of the Company with, any current or former employee of the Company, other than any person who ceased to be employed by the Company for a period of at least twelve (12) months; and
(d) the Executive will not, directly or indirectly, assist any person or entity in performing any activity prohibited by Sections 7(a), 7(b) or 7(c).
8. Non-Disparagement. During the Executive’s employment with the Company, whether or not under this Agreement, and at all times thereafter, the Executive will not, directly or indirectly, make any disparaging statements, written or oral, about the Company or any of its directors, officers, employees, stockholders, affiliates, managers, members, partners, agents, attorneys or representatives. This Section shall not, however, prohibit the Executive from testifying truthfully as a witness in any court proceeding or governmental investigation or from making nonpublic comments in the course of his duties as President and CEO and/or a Director of the Company.
9. Remedies. Without limiting the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in Sections 6 through 8 herein could result in irreparable injury to the Company for which there might be no adequate remedy at law, and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary injunction and a permanent injunction restraining the Executive from engaging in any activities prohibited by Sections 6 through 8 herein or such other equitable relief as may be required to enforce specifically any of the covenants of Sections 6 through 8 herein. In the event of such a breach, the Company shall be entitled to recover from the Executive all reasonable attorneys’ fees and costs incurred by it in connection with such breach. Additionally, if Executive violates Section 7 of this Agreement, the temporal period applicable to that Section shall be extended by the period of time during which such violation occurred.
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10. Review of Agreement; Reasonable Restrictions. The Executive (a) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for this Agreement to be reviewed by counsel, (b) acknowledges that the duration, geographical scope and subject matter of Sections 6, 7, and 8 of this Agreement are reasonable and necessary to protect the goodwill, customer relationships, legitimate business interests, reputation, and Confidential Information of the Company and its affiliates, and (c) will be able to earn a satisfactory livelihood without violating this Agreement.
11. Survival. The provisions of Sections 6 through 22 of this Agreement shall survive the Term of this Agreement and the termination of the Executive’s employment with the Company, and shall continue thereafter in full force and effect in accordance with their terms.
12. Enforceability. This Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under any such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of such provision or any other provisions of this Agreement. If any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by applicable law.
13. Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to the Executive, at the address (or to the facsimile number) shown on the records of the Company, and (b) if to the Company, to Sandra L. Jesse, Chief Legal Officer, Haemonetics Corporation, 400 Wood Road, Braintree, MA 02169, ([email protected]); or (c) or at such other address as may have been furnished by such person in writing to the other parties. Any such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received, if given by registered or certified mail, return receipt requested or given by overnight delivery service, or three days after the date mailed, if otherwise given by first class mail, postage prepaid.
14. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to its choice of law provisions. Any proceeding arising out of or relating to this Agreement shall be brought in the courts of the Commonwealth of Massachusetts, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Massachusetts. This provision may be filed with any court as written evidence of the knowing, voluntary, and irrevocable agreement between the Parties to waive any objections to jurisdiction, venue or convenience of forum.
15. Amendments and Waivers. This Agreement may be amended or modified only by a written instrument signed by the Company and the Executive. No waiver of this Agreement or any provision hereof shall be binding upon the party against whom enforcement of such
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waiver is sought unless it is made in writing and signed by or on behalf of such party. The waiver of a breach of any provision of this Agreement shall not be construed as a waiver or a continuing waiver of the same or any subsequent breach of any provision of this Agreement. No delay or omission in exercising any right under this Agreement shall operate as a waiver of that or any other right.
16. Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective heirs, executors and administrators, successors and assigns, except that the rights and obligations of the Executive hereunder are personal and may not be assigned without the Company’s prior written consent. Any assignment of this Agreement by the Company shall not be considered a termination of the Executive’s employment. This Agreement shall continue to be binding and enforceable in full notwithstanding any changes that may occur in the terms or conditions of the Executive’s employment with the Company.
17. Entire Agreement. This Agreement constitutes the final and entire agreement of the Parties with respect to the matters covered hereby and replaces and supersedes all other agreements and understandings relating hereto and to the Executive’s employment, other than the Executive Severance Agreement and the Change in Control Agreement.
18. Counterparts. This Agreement may be executed in any number of counterparts, including counterpart signature pages or counterpart facsimile or electronic signature pages, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19. Interpretation. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authoring any of the provisions of this Agreement.
20. No Conflicting Agreements. The Executive represents and warrants to the Company that the Executive is not a party to or bound by any confidentiality, noncompetition, nonsolicitation, employment, consulting or other agreement or restriction that could conflict with, or be violated by, the performance of the Executive’s duties to the Company or obligations under this Agreement. The Executive will not use or misappropriate any intellectual property, trade secrets or confidential information belonging to former employers or to any other person or entity with whom the Executive has or had an agreement or to whom he owes a duty to keep such information in confidence.
21. Notification of New Employer. In the event that the Executive is no longer an employee of the Company, the Executive consents to notification by the Company to the Executive’s new employer or its agents regarding the Executive’s rights and obligations under this Agreement or any other agreement or understanding. Executive further agrees that during the two years following termination of his employment, Executive will give notice to the
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Company of each new business activity Executive plans to undertake, at least (10) business days prior to beginning any such activity. The notice shall state the name and address of the person, corporation, association or other entity or organization (each, an “Entity”) for whom such activity is undertaken and the nature of Executive’s business relationship or position with the Entity. Executive further agree to provide the Company with other pertinent information concerning such business activity as the Company may reasonably request in order to determine Executive’s continued compliance with his obligations under this Agreement.
22. Key Man Insurance. The Executive acknowledges that the Company may wish to purchase insurance on the life of the Executive, the proceeds of which would be payable to the Company or an affiliate of the Company. The Executive hereby consents to such insurance and agrees to submit to any medical examination and release of medical records required to obtain such insurance.
23. Section 409A. The Parties intend for this Agreement to comply with and be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended and the United States Department of Treasury regulations and other guidance issued thereunder (collectively, “Section 409A”). Each payment in a series of payments provided to the Executive pursuant to this Agreement will be deemed a separate payment for purposes of Section 409A. If any amount payable under this Agreement upon a termination of employment is determined by the Company to constitute nonqualified deferred compensation for purposes of Section 409A (after taking into account the short-term deferral exception and the involuntary separation pay exception of the regulations promulgated under Section 409A which are hereby incorporated by reference), such amount shall not be paid unless and until the Executive’s termination of employment also constitutes a “separation from service” from the Company for purposes of Section 409A. In the event that the Executive is determined by the Company to be a “specified employee” for purposes of Section 409A at the time of his separation from service with the Company, any payments of nonqualified deferred compensation (after giving effect to any exemptions available under Section 409A) otherwise payable to the Executive during the first six (6) months following his separation from service shall be delayed and paid in a lump sum upon the earlier of (i) the Executive’s date of death, or (ii) the first day of the seventh month following the Executive’s separation from service, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent any expense, reimbursement or in-kind benefit provided to the Executive constitutes nonqualified deferred compensation for purposes of Section 409A, (x) the amount of any expense eligible for reimbursement or the provision of any in-kind benefit with respect to any calendar year shall not affect the amount of expense eligible for reimbursement or the amount of in-kind benefit provided to the Executive in any other calendar year, (y) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, and (z) the right to payment or reimbursement or in-kind benefits hereunder may not be subject to liquidation for any other benefit.
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IN WITNESS WHEREOF, the Parties have executed this Agreement under seal as of the date last written below.
HAEMONETICS CORPORATION
By: /s/ Richard Meelia
Richard Meelia
Chairman of the Board of Directors
EXECUTIVE
/s/ Christopher A. Simon
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Appendix A
Other Board Memberships
None
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EXHIBIT 10.2
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this “Agreement”) between Haemonetics Corporation, a Massachusetts corporation with its principal offices at 400 Wood Road, Braintree, Massachusetts, 02184, (herein referred to as the “Company”) and Christopher A. Simon (the “Officer”) is made effective as of the Start Date (as defined in the Employment Agreement, effective as of May 16, 2016, between the Officer and the Company (the “Employment Agreement”)). The Company and the Officer are collectively referred to herein as the “Parties” and individually referred to as a “Party.”
BACKGROUND
A. | The Officer is employed by the Company as a senior executive of the Company. |
B. | The Company considers a sound and vital management team to be essential. Management personnel who become concerned about a loss or significant change in their management roles may terminate their employment, become distracted, or be faced with a conflict of interest. |
C. | The Board of Directors of the Company (the “Board”) decided that the Company should provide certain compensation and benefits to the Officer in the event that the Officer’s employment terminates under certain circumstances; |
AGREEMENT
1. | Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below: |
(a) | “Separation from Service” or “Separates from Service” means a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) (after applying the presumptions in Treas. Reg. Sec. 1.409A-1(h)). |
(b) | “Cause” means (i) the Officer’s conviction of (or plea of guilty or nolo contendere to) a felony or any other crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (ii) a determination by a majority of the Board in good faith that the Officer has (A) willfully and continuously failed to perform substantially the Officer’s duties, other than any such failure resulting from the Officer’s Disability, after a written demand for substantial performance is delivered to the Officer by the Board that specifically identifies the manner in which the Board believes that the |
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Officer has not substantially performed the Officer’s duties, (B) engaged in illegal conduct (other than minor traffic offenses), an act of dishonesty or gross misconduct, or (C) willfully violated a material requirement of the Company’s code of conduct or the Officer’s fiduciary duty to the Company. No act or failure to act on the part of the Officer shall be considered “willful” unless it is done, or omitted to be done, by the Officer in bad faith and without reasonable belief that the Officer’s action or omission was in, or not opposed to, the best interests of the Company or its subsidiaries. In order to terminate the Officer’s employment for Cause, the Company shall be required to provide the Officer a reasonable opportunity to be heard (with counsel) before the Board, which shall include at least ten (10) business days of advance written notice to the Officer. Further, the Officer’s attempt to secure employment with another employer that does not breach the Officer’s non-competition obligations shall not constitute an event of Cause.
(c) | “Constructive Termination” means, without the express written consent of the Officer, the occurrence of any of the following: |
(i) | any reduction in the Officer’s annual base salary, annual target bonus opportunity (100% of base salary) and/or annual maximum bonus opportunity (200% of base salary); |
(ii) | a material diminution in the Officer’s authority, duties, or responsibilities; |
(iii) | a requirement that the Officer report to any individual or body other than the Board; |
(iv) | the Company’s requiring the Officer to be based anywhere outside a fifty mile radius of the Company’s offices at which the Officer is based as of the date of this agreement except for required travel on the Company’s business; or |
(v) | any other action or inaction that constitutes a material breach by the Company or any of its subsidiaries of the terms of this Agreement. |
In no event shall the Officer be entitled to terminate employment with the Company on account of Constructive Termination unless the Officer provides notice of the existence of the purported condition that constitutes Constructive Termination within a period not to exceed ninety (90) days of its initial existence, and the Company fails to cure such condition (if curable) within thirty (30) days after the receipt of such notice.
(d) | “Disability” means the Officer’s inability, due to physical or mental incapacity resulting from injury, sickness or disease, for one hundred and eighty (180) days in any twelve-month period to perform his duties. |
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2. | Term. This Agreement may not be terminated by the Company for any reason for as long as the Officer continues to serve as the Chief Executive Officer of the Company. This Agreement shall be enforceable in accordance with its terms for any period following the Officer’s Separation from Service to the Company until all payments and benefits provided hereunder, if any, have been paid or delivered in full, and all other obligations of the parties to this Agreement have been fully discharged. For the avoidance of doubt, no Severance Benefits (as defined below) shall be paid or provided by the Company to the Officer under this Agreement if the Officer Separates from Service due to termination of employment (i) by the Company and its subsidiaries for Cause or (ii) by the Officer, including by the Officer’s notification of the Company of the Officer’s intention not to renew the term of the Employment Agreement, absent the occurrence of Constructive Termination. |
3. | Severance Benefits. If the Officer Separates from Service due to termination of employment by the Company and its subsidiaries without Cause (including, for avoidance of doubt, the Company’s failure to renew the Term of the Employment Agreement) or by the Officer due to Constructive Termination (each, a “Qualifying Termination”), the Officer shall be entitled to the severance benefits set forth in this Paragraph 3 (“Severance Benefits”). |
(a) Salary Amount. The Company will pay to the Officer an amount equal to two times the Officer’s base salary at the annualized rate which was being paid by the Company and/or its subsidiaries to the Officer immediately prior to the Qualifying Termination.
(b) Payment for Welfare Benefits. The Officer shall be entitled to receive a lump sum cash amount intended to cover the approximate cost of the Company’s portion of the premiums necessary to continue the coverage under the Officer’s medical, dental, life insurance and disability insurance coverages as in effect on the date of the Separation from Service for a period of two years. For avoidance of doubt, medical coverage for this purpose shall include medical coverage provided to non-employees covered with the Officer under the Company sponsored plan, policy or program at the time of the Qualifying Termination, and premiums with respect to medical and dental coverage shall be determined using the rate charged for COBRA coverage. The Officer shall be entitled to elect continued benefits provided under any employee benefit plan, policy or program sponsored by the Company as in effect on the Officer’s Separation from Service, including but not limited to COBRA.
(c) Outplacement Services. In the event of a Qualifying Termination, the Company shall provide to the Officer executive outplacement services provided on a one-to-one basis by a senior counselor of a firm nationally recognized as a reputable national provider of such services for up to twelve months following Separation from Service, plus evaluation testing, at a location mutually agreeable to the Parties, up to a maximum amount of $20,000. If the Officer elects not to take advantage of such program within 30 days of separation, unless otherwise agreed in writing, there will be no obligation to continue this service. In no circumstance will the Company provide a cash payment in lieu of the use of these services.
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(d) Limits on Severance Benefits.
(i) | Except as provided in (ii) below, the Officer shall not be entitled to Severance Benefits upon any other Separation from Service or other termination of employment, including a termination of employment by the Company for Cause or due to the Officer’s death or Disability. The Severance Benefits shall be in lieu of any other severance benefits otherwise payable by the Company to the Officer and shall be subject to reduction due to application of the Section 280G Cap. No Severance Benefit shall be paid under this Agreement unless the Officer has timely executed a release that is not revoked as provided under Paragraph 5 below. |
(ii) | If the Officer is party to a change in control agreement between the Company and the Officer (the “CinC Agreement”) and the Officer is entitled to the severance benefits available under the CinC Agreement, then the Officer shall not receive the Severance Benefits provided under this Agreement. |
(iii) | By accepting the Severance Benefits, the Officer waives the Officer’s right, if any, to have any Severance Benefit payment taken into account to increase the benefits otherwise payable to, or on behalf of, the Officer under any employee benefit plan, policy or program, whether qualified or nonqualified, maintained by the Company including those provided for under the CinC Agreement (e.g., there will be no increase in the Officer’s tax-qualified retirement plan benefits, non-qualified deferred compensation plan benefits or life insurance because of Severance Benefits received hereunder). |
(e) Timing. Payment for the welfare benefits under Paragraph 3(b) shall be made within 30 days after a Qualifying Termination and the Severance Benefits described in Paragraph 3(a) shall be made in approximately equal installments over the course of two years in accordance with the Company’s regular payroll practices, commencing 30 days after a Qualifying Termination. The Company will withhold from the Severance Benefits taxes and other authorized deductions, including advances or other amounts due the Company from the Officer. The Company will pay the Severance Benefits only after the Officer has timely executed a release that is not revoked as provided under Paragraph 5 below.
4. | Section 280G Restriction. Notwithstanding any provision of this Agreement to the contrary, the following provisions shall apply: |
(a) | If it is determined that part or all of the compensation and benefits payable to the Officer (whether pursuant to the terms of this Agreement or otherwise) before application of this Paragraph 4 would constitute “parachute payments” under Section 280G of the Code, and the payment thereof would cause the Officer to incur the 20% excise tax under Section 4999 of the Code, then the amounts otherwise payable to or for the benefit of the Officer pursuant to this Agreement (or otherwise) that, but |
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for this Paragraph 4 would be “parachute payments,” (referred to below as the “Total Payments”) shall either (i) be reduced so that the present value of the Total Payments to be received by the Officer will be equal to three times the “base amount” (as defined under Section 280G of the Code) less $1,000 (the “280G Cap”), or (ii) paid in full, whichever produces the better after-tax position to the Officer (taking into account all applicable taxes, including but not limited to the excise tax under Section 4999 of the Code and any federal and state income and employment taxes). Any required reduction under clause (i) above shall be made in a manner that maximizes the net after-tax amount payable to the Officer, as reasonably determined by the Consultant (as defined below).
(b) | All determinations required under this Paragraph 4 shall be made by a nationally recognized accounting, executive compensation or law firm appointed by the Company (the “Consultant”) that is reasonably acceptable to the Officer on the basis of “substantial authority” (within the meaning of Section 6662 of the Code). The Consultant’s fee shall be paid by the Company. The Consultant shall provide a report to the Officer that may be used by the Officer to file the Officer’s federal tax returns. |
(c) | It is possible that payments could be made by the Company that should not have been made pursuant to this Paragraph 4. If a payment or benefit is provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company (or its subsidiaries) used in determining the 280G Cap, then the Officer shall immediately repay such excess in cash to the Company upon notification that an overpayment has been made. |
(d) | Nothing in this Paragraph 4 shall require the Company to be responsible for, or have any liability or obligation with respect to, any excise tax liability under Section 4999 of the Code. |
5. | Release. The Officer agrees that the Company will have no obligations to pay the Severance Benefits until the Officer executes a separation agreement which includes a release of claims in a form acceptable by the Company. The Company shall have no further obligations to the Officer if the Officer revokes such release. The Officer shall have 21 days after Separation from Service to consider whether or not to sign the release. If the Officer fails to return an executed release to the Company within such 21 day period, or the Officer subsequently revokes a timely filed release, the Company shall have no obligation to pay any amounts or benefits under Paragraph 3 of this Agreement. |
6. | No Interference with Other Vested Benefits. Regardless of the circumstances under which the Officer may terminate from employment, the Officer shall have a right to any benefits under any employee benefit plan, policy or program maintained by the Company which the Officer had a right to receive under the terms of such employee benefit plan, policy or program after a termination of the Officer’s employment without regard to this Agreement. The Company shall within thirty (30) days of Separation from Service (or sooner if required by applicable law) pay the Officer any earned but unpaid base salary and bonus, shall |
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promptly pay the Officer for any earned but untaken vacation and shall promptly reimburse the Officer for any incurred but unreimbursed expenses which are otherwise reimbursable under the Company’s expense reimbursement policy as in effect for senior executives immediately before the Officer’s termination of employment.
7. | Consolidation or Merger. If the Company is at any time before a Separation from Service merged or consolidated into or with any other corporation, association, partnership or other entity (whether or not the Company is the surviving entity), or if substantially all of the assets thereof are transferred to another corporation, association, partnership or other entity, the provisions of this Agreement will be binding upon and inure to the benefit of the corporation, association, partnership or other entity resulting from such merger or consolidation or the acquirer of such assets (collectively, “Acquiring Entity”) unless the Officer voluntarily elects not to become an employee of the Acquiring Entity as determined in good faith by the Officer. Furthermore, in the event of any such consolidation or transfer of substantially all of the assets of the Company, the Company shall enter into an agreement with the Acquiring Entity that shall provide that such Acquiring Entity shall assume this Agreement and all obligations and liabilities under this Agreement; provided, that the Company’s failure to comply with this provision shall not adversely affect any right of the Officer hereunder. This Paragraph 7 will apply in the event of any subsequent merger or consolidation or transfer of assets. |
In the event of any merger, consolidation or sale of assets described above, nothing contained in this Agreement will detract from or otherwise limit the Officer’s right to or privilege of participation in any restricted stock plan, bonus or incentive plan, stock option or purchase plan, profit sharing, pension, group insurance, hospitalization or other compensation or benefit plan or arrangement which may be or become applicable to officers of the corporation resulting from such merger or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described above, references to the Company in this Agreement shall, unless the context suggests otherwise, be deemed to include the Acquiring Entity.
8. | No Mitigation. The Company agrees that the Officer is not required to seek other employment after a Qualifying Termination or to attempt in any way to reduce any amounts payable to the Officer by the Company under Paragraph 3 of this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Officer as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Officer to the Company, or otherwise. |
9. | Payments. All payments provided for in this Agreement shall be paid in cash in the currency of the primary jurisdiction in which the Officer provided services to the Company and its subsidiaries immediately prior to Separation from Service. The Company shall not be required to fund or otherwise segregate assets to ensure payments under this Agreement. |
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10. | Tax Withholding; Section 409A. |
(a) | All payments made by the Company to the Officer or the Officer’s dependents, beneficiaries or estate will be subject to the withholding of such amounts relating to tax and/or other payroll deductions as may be required by law. |
(b) | The Parties intend that the benefits and payments provided under this Agreement shall be exempt from, or comply with, the requirements of Section 409A of the Code. Notwithstanding the foregoing, the Company shall in no event be obligated to indemnify the Officer for any taxes or interest that may be assessed by the IRS pursuant to Section 409A of the Code. Each payment or installment under this Agreement is intended to be a “separate payment” for purposes of Section 409A of the Code. |
11. | Assignment; Payment on Death. |
(a) | The provisions of this Agreement shall be binding upon and shall inure to the benefit of the Officer, the Officer’s executors, administrators, legal representatives and assigns and the Company and its successors. |
(b) | In the event that the Officer becomes entitled to payments under this Agreement and subsequently dies, all amounts payable to the Officer hereunder and not yet paid to the Officer at the time of the Officer’s death shall be paid to the Officer’s beneficiary. No right or interest to or in any payments shall be assignable by the Officer; provided, however, that this provision shall not preclude the Officer from designating one or more beneficiaries to receive any amount that may be payable after the Officer’s death and shall not preclude the legal representatives of the Officer’s estate from assigning any right hereunder to the person or persons entitled thereto under the Officer’s will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to the Officer’s estate. The term “beneficiary” as used in this Agreement shall mean the beneficiary or beneficiaries so designated by the Officer to receive such amount or, if no such beneficiary is in existence at the time of the Officer’s death, the legal representative of the Officer’s estate. |
(c) | No right, benefit or interest hereunder shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. |
12. | Non-Competition. With execution of this Agreement, Officer ratifies and confirms the Officer’s obligations to the Company and its affiliates under any proprietary information and non-competition agreement by and between the Officer and the Company or under any |
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similar provisions or obligations concerning confidentiality, non-competition or non-solicitation.
13. | Amendments and Waivers. Except as otherwise specified in this Agreement, this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Parties. |
14. | Integration. The terms of this Agreement shall supersede any prior agreements, understandings, arrangements or representations, oral or otherwise, expressed or implied, with respect to the subject matter hereof which have been made by either Party (other than (x) any employment agreement or (y) any proprietary information and non-competition agreement or any similar provisions or obligations concerning confidentiality, non-competition, non-solicitation or non-disparagement), provided that any conflict with the terms of any CinC Agreement upon or after a Change in Control (as defined in the CinC Agreement) the CinC Agreement prevails and any conflict prior to a Change in Control this Agreement prevails. By signing this Agreement, the Officer releases and discharges the Company from any and all obligations and liabilities heretofore or now existing under or by virtue of such prior agreements other than any employment agreement entered into by the Parties or any CinC Agreement. |
15. | Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: |
If to the Officer: at the address (or to the facsimile number) shown on the records of the Company.
If to the Company:
Chief Legal Officer
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
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16. | Severability. Any provision of this Agreement held to be unenforceable under applicable law will be enforced to the maximum extent possible, and the balance of this Agreement will remain in full force and effect. |
17. | Headings of No Effect. The paragraph headings contained in this Agreement are included solely for convenience or reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement. |
18. | Not an Employment Contract. This Agreement is not an employment contract and shall not give the Officer the right to continue in employment by Company or any of its subsidiaries for any period of time or from time to time nor shall this Agreement give the Officer the right to continued membership on the Company’s Executive Council or Operating Committee. This Agreement shall not adversely affect the right of the Company or any of its subsidiaries to terminate the Officer’s employment with or without Cause at any time. |
19. | Governing Law. This Agreement and its validity, interpretation, performance and enforcement shall be governed by the laws of the Commonwealth of Massachusetts (without reference to the choice of law principles thereof). |
20. | Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. |
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereto duly authorized, and the Officer has signed this Agreement.
HAEMONETICS CORPORATION
By:/s/ Richard Meelia
Richard Meelia
Chairman of the Board of Directors
OFFICER
/s/ Christopher A. Simon
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EXHIBIT 10.3
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (this “Agreement”) between Haemonetics Corporation, a Massachusetts corporation with its principal offices at 400 Wood Road, Braintree, Massachusetts, 02184, (herein referred to as the “Company”) and Christopher A. Simon (the “Officer”), is made effective as of the Start Date (as defined in the Employment Agreement, effective as of May 16, 2016, between the Officer and the Company (the “Employment Agreement”)) (the “Effective Date”). The Company and the Officer are collectively referred to herein as the “Parties” and individually referred to as a “Party.”
WITNESSETH THAT
WHEREAS, the Officer is employed by the Company as a senior executive of the Company or one, or more than one, of the Company’s subsidiaries; and
WHEREAS, the Board of Directors of the Company (the “Board”) decided that the Company should provide certain compensation and benefits to the Officer in the event that the Officer’s employment is terminated on or after a change in the ownership or control of the Company under certain circumstances;
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, for so long as Officer remains a member of the Company’s Operating Committee, then the Parties agree as follows:
1. | Purpose. The Company considers a sound and vital management team to be essential. Management personnel who become concerned about the possibility that the Company may undergo a Change in Control (as defined in Paragraph 2 below) may terminate employment or become distracted. Accordingly, the Board has determined to extend this Agreement to minimize the distraction the Officer may suffer from the possibility of a Change in Control. |
2. | Change in Control. The term “Change in Control” for purposes of this Agreement shall mean the earliest to occur of the following events during the Term (as defined in Paragraph 3 below): |
(a) | a person, or any two or more persons acting as a group, and all affiliates of such person or persons, who prior to such time owned less than thirty-five percent (35%) of the then outstanding shares of the Company’s $0.01 par value common stock (“Common Stock”), shall acquire such additional shares of the Company’s Common Stock in one or more transactions, or series of transactions, such that following such transaction or transactions such person or group and affiliates beneficially own thirty-five percent (35%) or more of the Company’s Common Stock outstanding, |
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(b) | closing of the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, and |
(c) | there is a consummation of any merger, reorganization, consolidation or share exchange unless the persons who were the beneficial owners of the outstanding shares of the common stock of Company immediately before the consummation of such transaction beneficially own more than 50% of the outstanding shares of the common stock of the successor or survivor entity in such transaction immediately following the consummation of such transaction. For purposes of this Paragraph 2(c), the percentage of the beneficially owned shares of the successor or survivor entity described above shall be determined exclusively by reference to the shares of the successor or survivor entity which result from the beneficial ownership of shares of common stock of the Company by the persons described above immediately before the consummation of such transaction. |
3. | Term. This Agreement may not be terminated by the Company for any reason for as long as the Officer continues to serve as the Chief Executive Officer of the Company. This Agreement shall be enforceable in accordance with its terms for any period following the Officer’s Separation from Service to the Company until all payments and benefits provided hereunder, if any, have been paid or delivered in full, and all other obligations of the parties to this Agreement have been fully discharged (the “Term”). If a Change in Control occurs during the Term, the Term shall automatically extend until the second anniversary of the Change in Control (the “Protection Period”). At the end of the Term, this Agreement shall terminate without further action by either the Company or the Officer. If no Change in Control occurs prior to expiration of the Term or if the Officer Separates from Service (as defined in Paragraph 5(a) below) before a Change in Control this Agreement shall automatically terminate without any further action; provided, however, that Paragraph 13 (regarding arbitration) shall continue to apply to the extent the Officer disputes the termination of this Agreement. For the avoidance of doubt, no Severance Benefits (as defined below) shall be paid or provided by the Company to the Officer under this Agreement if the Officer Separates from Service due to termination of employment (i) by the Company and its subsidiaries for Cause or (ii) by the Officer, including by the Officer’s notification of the Company of the Officer’s intention not to renew the term of the Employment Agreement, absent the occurrence of Constructive Termination. |
4. | Severance Benefits. If, during the Protection Period (as defined in Paragraph 3 above), the Officer “Separates from Service” (as defined in Paragraph 5(a) below) due to termination of employment by the Company and its subsidiaries without “Cause” (as defined in Paragraph 5(b)) (including, for avoidance of doubt, the Company’s failure to renew the term of the Employment Agreement) or by the Officer due to “Constructive Termination” (as defined in Paragraph 5(c)) (each, a “Qualifying Termination”), the Officer shall be entitled to the severance benefits set forth in this Paragraph 4. The Officer shall not be entitled to severance benefits upon any other Separation from Service, including a termination of employment by the Company for Cause or due to the Officer’s death or Disability (as defined in Paragraph 5(d)). The payments and benefits provided for under this Paragraph 4 shall |
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be in lieu of any other severance benefits otherwise payable by the Company to the Officer and shall be subject to reduction due to application of the Section 280G Cap as provided under Paragraph 6 below. Payment of the severance benefits as may be reduced by the 280G Cap, if applicable, shall commence 30 days after a Qualifying Termination, provided that the Officer has timely executed a release that is not revoked as provided under Paragraph 7 below. No severance benefit shall be paid under this Agreement if the Officer has not timely executed a release under Paragraph 7.
(a) Salary and Bonus Amount. The Company will pay to the Officer thirty days after a Qualifying Termination a lump sum cash amount equal to the product obtained by multiplying:
(i) | the sum of (A) salary at the annualized rate which was being paid by the Company and/or subsidiaries to the Officer immediately prior to the time of such termination or, if greater, at the time of the Change in Control plus (B) the annual target bonus and/or any other annual cash incentive award opportunity applicable to the Officer at the time of the Qualifying Termination or, if greater, at the time of the Change in Control, by |
(ii) | 2.99 |
(b) Payment for Welfare Benefits. The Officer shall be entitled to receive a lump sum cash amount intended to cover the approximate cost of the Company’s portion of the premiums necessary to continue the coverage under the Officer’s medical, dental, life insurance and disability insurance coverages (collectively, the “Welfare Benefits”) as in effect upon Separation from Service for a period of three years following a Qualifying Termination. For avoidance of doubt, medical coverage for this purpose shall include medical coverage provided to members of the Officer’s immediate family under a Company sponsored plan, policy or program at the time of the Officer’s employment termination, and premiums with respect to medical and dental coverage shall be determined using the rate charged for COBRA coverage. The Officer shall be entitled to elect continued Welfare Benefits as provided under any employee benefit plan, policy or program sponsored by the Company as in effect on the Officer’s Separation from Service, including but not limited to COBRA.
(c) Outplacement Services. In the event of a Qualifying Termination, the Company shall provide to the Officer executive outplacement services provided on a one-to-one basis by a senior counselor of a firm nationally recognized as a reputable national provider of such services for up to twelve months following Separation from Service, plus evaluation testing, at a location mutually agreeable to the Parties, up to a maximum amount of $35,000. If the Officer elects not to take advantage of such program within 30 days of separation, unless otherwise agreed in writing, there will be no obligation to continue this service. In no circumstance will the Company provide a cash payment in lieu of the use of these services.
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(d) Equity Awards. Except as otherwise provided with respect to a change in control by the terms of the Officer’s Equity Awards, the vesting of the Officer’s Equity Awards shall be governed by this Paragraph 4(d). The term “Equity Award” shall mean stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or any other form of award that is measured with reference to the Company’s Common Stock.
(i) | The vesting of the Officer’s Equity Awards granted on or after the Effective Date that vest solely on the basis of continued employment with the Company or any of its subsidiaries shall be accelerated solely by reason of a Change in Control only if the surviving corporation or acquiring corporation following a Change in Control refuses to assume or continue the Officer’s Equity Awards or to substitute similar Equity Awards for those outstanding immediately prior to the Change in Control. If such Officer’s Equity Awards are so continued, assumed or substituted and at any time after the Change in Control the Officer incurs a Qualifying Termination, then the vesting and exercisability of all such unvested Equity Awards held by the Officer that are then outstanding shall be accelerated in full and any reacquisition rights held by the Company with respect to any such Equity Award shall lapse in full, in each case, upon such termination. |
(ii) | The vesting of the Officer’s Equity Awards that vest, in whole or in part, based upon achieving Performance Criteria shall be accelerated on a pro rata basis by reason of a Change in Control. The pro rata vesting amount shall equal the designated target award multiplied by a fraction, the numerator of which is the number of days the Officer was employed during the award’s performance period as of the date of the Change in Control, and the denominator of which is the number of days in the performance period. For purposes of this Paragraph 4(d), “Performance Criteria” means any business criteria that apply to the Officer, a business unit, division, subsidiary, affiliate, the Company or any combination of the foregoing. |
(iii) | Enforcement of the terms of this Paragraph 4(d) shall survive termination of this Agreement. |
Equity Awards granted before the Effective Date shall not be subject to this Paragraph 4(d).
By accepting severance benefits under this Paragraph 4, the Officer waives the Officer’s right, if any, to have any payment made under this Paragraph 4 taken into account to increase the benefits otherwise payable to, or on behalf of, the Officer under any employee benefit plan, policy or program, whether qualified or nonqualified, maintained by the Company (e.g., there will be no increase in the Officer’s tax-qualified retirement plan benefits, non-qualified deferred compensation plan benefits or life insurance because of severance benefits received hereunder).
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5. | Definitions of “Separation from Service,” “Cause,” “Constructive Termination,” and “Disability”. For purposes of this Agreement, the following terms shall have the meanings set forth below: |
(a) | The term “Separation from Service” or “Separates from Service” for purposes of this Agreement shall mean a “separation from service” within the meaning of Section 409A of the Code (after applying the presumptions in Treas. Reg. Sect. 1.409A-1(h)). |
(b) | “Cause” means (i) the Officer’s conviction of (or a plea of guilty or nolo contendere to) a felony or any other crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (ii) a determination by a majority of the Board in good faith that the Officer has (A) willfully and continuously failed to perform substantially the Officer’s duties (other than any such failure resulting from the Officer’s Disability or incapacity due to bodily injury or physical or mental illness), after a written demand for substantial performance is delivered to the Officer by the Board that specifically identifies the manner in which the Board believes that the Officer has not substantially performed the Officer’s duties, (B) engaged in illegal conduct (other than minor traffic offenses), an act of dishonesty or gross misconduct, or (C) willfully violated a material requirement of the Company’s code of conduct or the Officer’s fiduciary duty to the Company. No act or failure to act on the part of the Officer shall be considered “willful” unless it is done, or omitted to be done, by the Officer in bad faith and without reasonable belief that the Officer’s action or omission was in, or not opposed to, the best interests of the Company or its subsidiaries. In order to terminate the Officer’s employment for Cause, the Company shall be required to provide the Officer a reasonable opportunity to be heard (with counsel) before the Board, which shall include at least ten (10) business days of advance written notice to the Officer. Further, the Officer’s attempt to secure employment with another employer that does not breach the Officer’s non-competition obligations shall not constitute an event of Cause. |
(c) “Constructive Termination” means, without the express written consent of the Officer, the occurrence of any of the following during the Protection Period (as defined in Paragraph 3 above):
(i) | any reduction in the Officer’s annual base salary, annual target bonus opportunity and/or annual maximum bonus opportunity as in effect immediately prior to a Change of Control or as the same may be increased from time to time; |
(ii) | a material diminution in the Officer’s authority, duties, or responsibilities as in effect at the time of the Change in Control; |
(iii) | a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Officer is required to report (it being understood that |
Page 5 of 5
if the Officer reports to the Board, a requirement that the Officer report to any individual or body other than the Board will constitute Constructive Termination hereunder);
(iv) | a material diminution in the budget over which the Officer retains authority; |
(v) | the Company’s requiring the Officer to be based anywhere outside a fifty mile radius of the Company’s offices at which the Officer is based as of immediately prior to a Change of Control (or any subsequent location at which the Officer has previously consented to be based) except for required travel on the Company’s business to an extent that is not substantially greater than the Officer’s business travel obligations as of immediately prior to a Change in Control or, if more favorable, as of any time thereafter; or |
(vi) | any other action or inaction that constitutes a material breach by the Company or any of its subsidiaries of the terms of this Agreement. |
In no event shall the Officer be entitled to terminate employment with the Company on account of Constructive Termination unless the Officer provides notice of the existence of the purported condition that constitutes Constructive Termination within a period not to exceed ninety (90) days of its initial existence, and the Company fails to cure such condition (if curable) within thirty (30) days after the receipt of such notice.
(d) | “Disability” means the Officer’s inability, due to physical or mental incapacity resulting from injury, sickness or disease, for one hundred and eighty (180) days in any twelve-month period to perform his duties hereunder. |
6. Section 280G Restriction. Notwithstanding any provision of this Agreement to the contrary, the following provisions shall apply:
(a) | If it is determined that part or all of the compensation and benefits payable to the Officer (whether pursuant to the terms of this Agreement or otherwise) before application of this Paragraph 6 would constitute “parachute payments” under Section 280G of the Code, and the payment thereof would cause the Officer to incur the 20% excise tax under Section 4999 of the Code, then the amounts otherwise payable to or for the benefit of the Officer pursuant to this Agreement (or otherwise) that, but for this Paragraph 6 would be “parachute payments,” (referred to below as the “Total Payments”) shall either (i) be reduced so that the present value of the Total Payments to be received by the Officer will be equal to three times the “base amount” (as defined under Section 280G of the Code less $1,000 (the “280G Cap”), or (ii) paid in full, whichever produces the better after-tax position to the Officer (taking into account all applicable taxes, including but not limited to the excise tax under Section 4999 of the Code and any federal and state income and employment taxes). Any required reduction under clause (A) above shall be made in a manner that maximizes |
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the net after-tax amount payable to the Officer, as reasonably determined by the Consultant (as defined below).
(b) | All determinations required under this Paragraph 6 shall be made by a nationally recognized accounting, executive compensation or law firm appointed by the Company (the “Consultant”) that is reasonably acceptable to the Officer on the basis of “substantial authority” (within the meaning of Section 6662 of the Code). The Consultant’s fee shall be paid by the Company. The Consultant shall provide a report to the Officer that may be used by the Officer to file the Officer’s federal tax returns. |
(c) | It is possible that payments could be made by the Company that should not have been made pursuant to this Paragraph 6. If a reduced payment or benefit is provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company (or its subsidiaries) used in determining the 280G Cap, then the Officer shall immediately repay such excess in cash to the Company upon notification that an overpayment has been made. |
(d) | Nothing in this Paragraph 6 shall require the Company to be responsible for, or have any liability or obligation with respect to, any excise tax liability under Section 4999 of the Code. |
7. | Release. The Officer agrees that the Company will have no obligations to the Officer under Paragraph 4 above until the Officer executes a release in a form acceptable by the Company and, further, will have no further obligations to the Officer under Paragraph 4 if the Officer revokes such release. The Officer shall have 21 days after Separation from Service to consider whether or not to sign the release. If the Officer fails to return an executed release to the Company’s Vice President of Human Resources within such 21 day period, or the Officer subsequently revokes a timely filed release, the Company shall have no obligation to pay any amounts or benefits under Paragraph 4 of this Agreement. |
8. | No Interference with Other Vested Benefits. Regardless of the circumstances under which the Officer may terminate from employment, the Officer shall have a right to any benefits under any employee benefit plan, policy or program maintained by the Company which the Officer had a right to receive under the terms of such employee benefit plan, policy or program after a termination of the Officer’s employment without regard to this Agreement. The Company shall within thirty (30) days of Separation from Service pay the Officer any earned but unpaid base salary and bonus, shall promptly pay the Officer for any earned but untaken vacation and shall promptly reimburse the Officer for any incurred but unreimbursed expenses which are otherwise reimbursable under the Company’s expense reimbursement policy as in effect for senior executives immediately before the Officer’s employment termination. |
9. | Consolidation or Merger. If the Company is at any time before or after a Change in Control merged or consolidated into or with any other corporation, association, partnership or other |
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entity (whether or not the Company is the surviving entity), or if substantially all of the assets thereof are transferred to another corporation, association, partnership or other entity, the provisions of this Agreement will be binding upon and inure to the benefit of the corporation, association, partnership or other entity resulting from such merger or consolidation or the acquirer of such assets (collectively, “acquiring entity”) unless the Officer voluntarily elects not to become an employee of the acquiring entity as determined in good faith by the Officer. Furthermore, in the event of any such consolidation or transfer of substantially all of the assets of the Company, the Company shall enter into an agreement with the acquiring entity that shall provide that such acquiring entity shall assume this Agreement and all obligations and liabilities under this Agreement; provided, that the Company’s failure to comply with this provision shall not adversely affect any right of the Officer hereunder. This Paragraph 9 will apply in the event of any subsequent merger or consolidation or transfer of assets.
In the event of any merger, consolidation or sale of assets described above, nothing contained in this Agreement will detract from or otherwise limit the Officer’s right to or privilege of participation in any restricted stock plan, bonus or incentive plan, stock option or purchase plan, profit sharing, pension, group insurance, hospitalization or other compensation or benefit plan or arrangement which may be or become applicable to officers of the corporation resulting from such merger or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described above, references to the Company in this Agreement shall, unless the context suggests otherwise, be deemed to include the entity resulting from such merger or consolidation or the acquirer of such assets of the Company.
10. | No Mitigation. The Company agrees that the Officer is not required to seek other employment after a Qualifying Termination or to attempt in any way to reduce any amounts payable to the Officer by the Company under Paragraph 4 of this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Officer as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Officer to the Company, or otherwise. |
11. | Payments. All payments provided for in this Agreement shall be paid in cash in the currency of the primary jurisdiction in which the Officer provided services to the Company and its subsidiaries immediately prior to Separation from Service. The Company shall not be required to fund or otherwise segregate assets to ensure payments under this Agreement. |
12. | Tax Withholding; Section 409A. |
(a) | All payments made by the Company to the Officer or the Officer’s dependents, beneficiaries or estate will be subject to the withholding of such amounts relating to tax and/or other payroll deductions as may be required by law. |
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(b) | The Parties intend that the benefits and payments provided under this Agreement shall be exempt from, or comply with, the requirements of Section 409A of the Code. Notwithstanding the foregoing, the Company shall in no event be obligated to indemnify the Officer for any taxes or interest that may be assessed by the IRS pursuant to Section 409A of the Code. |
13. | Arbitration. |
(a) | The Parties shall submit any disputes arising under this Agreement to an arbitration panel conducting a binding arbitration in Boston, Massachusetts or at such other location as may be agreeable to the Parties, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect on the date of such arbitration, and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. The award of the arbitrator shall be final and shall be the sole and exclusive remedy between the Parties regarding any claims, counterclaims, issues or accountings presented to the arbitrator. |
(b) | The Parties agree that the arbitration shall be conducted by one (1) person mutually acceptable to the Company and the Officer, provided that if the Parties cannot agree on an arbitrator within thirty (30) days of filing a notice of arbitration, the arbitrator shall be selected by the manager of the principal office of the American Arbitration Association in Suffolk County in the Commonwealth of Massachusetts. Any action to enforce or vacate the arbitrator’s award shall be governed by the federal Arbitration Act, if applicable, and otherwise by applicable state law. |
(c) | If either Party pursues any claim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding Party shall be entitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action. |
(d) | All of Officer’s reasonable costs and expenses incurred in connection with such arbitration shall be paid in full by the Company promptly on written demand from the Officer, including the arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees and attorneys’ fees; provided, however, the Company shall pay no more than $50,000 per year in attorneys’ fees unless a higher figure is awarded in the arbitration, in which event the Company shall pay the figure awarded in the arbitration. |
(e) | Reimbursement of reasonable costs and expenses under Paragraph 13(d) shall be administered consistent with the following additional requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (i) the Officer’s eligibility for benefits in one year will not affect the Officer’s eligibility for benefits in any other year; (ii) any reimbursement of eligible expenses will be made on or before the last day of the |
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year following the year in which the expense was incurred; and (iii) the Officer’s right to benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the foregoing, reimbursement for benefits under this Paragraph 13 shall commence no earlier than six months and a day after the Officer’s Separation from Service.
(f) | The Officer acknowledges and expressly agrees that this arbitration provision constitutes a voluntary waiver of trial by jury in any action or proceeding to which the Officer or the Company may be parties arising out of or pertaining to this Agreement. |
14. | Assignment; Payment on Death. |
(a) | The provisions of this Agreement shall be binding upon and shall inure to the benefit of the Officer, the Officer’s executors, administrators, legal representatives and assigns and the Company and its successors. |
(b) | In the event that the Officer becomes entitled to payments under this Agreement and subsequently dies, all amounts payable to the Officer hereunder and not yet paid to the Officer at the time of the Officer’s death shall be paid to the Officer’s beneficiary. No right or interest to or in any payments shall be assignable by the Officer; provided, however, that this provision shall not preclude the Officer from designating one or more beneficiaries to receive any amount that may be payable after the Officer’s death and shall not preclude the legal representatives of the Officer’s estate from assigning any right hereunder to the person or persons entitled thereto under the Officer’s will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to the Officer’s estate. The term “beneficiary” as used in this Agreement shall mean the beneficiary or beneficiaries so designated by the Officer to receive such amount or, if no such beneficiary is in existence at the time of the Officer’s death, the legal representative of the Officer’s estate. |
(c) | No right, benefit or interest hereunder shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. |
15. | Amendments and Waivers. Except as otherwise specified in this Agreement, this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Parties. |
16. | Integration. The terms of this Agreement shall supersede any prior agreements, understandings, arrangements or representations, oral or otherwise, expressed or implied, |
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with respect to the subject matter hereof which have been made by either Party (other than (x) any employment agreement or (y) any proprietary information and non-competition agreement or any similar provisions or obligations concerning confidentiality, non-competition, non-solicitation or non-disparagement) provided that any conflict with the terms of any executive severance agreement entered into by the Parties (“Executive Severance Agreement”) prior to a Change of Control prevails and any conflict upon or after a Change in Control this Agreement prevails. By signing this Agreement, the Officer releases and discharges the Company from any and all obligations and liabilities heretofore or now existing under or by virtue of such prior agreements other than any employment agreement entered into by the Parties or any Executive Severance Agreement.
17. | Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: |
If to the Officer: at the address (or to the facsimile number) shown on the records of the Company.
If to the Company:
Chief Legal Officer
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
18. | Severability. Any provision of this Agreement held to be unenforceable under applicable law will be enforced to the maximum extent possible, and the balance of this Agreement will remain in full force and effect. |
19. | Headings of No Effect. The paragraph headings contained in this Agreement are included solely for convenience or reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement. |
20. | Not an Employment Contract. This Agreement is not an employment contract and shall not give the Officer the right to continue in employment by Company or any of its subsidiaries for any period of time or from time to time nor shall this Agreement give the Officer the |
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right to continued membership on the Company’s Executive Council or Operating Committee. This Agreement shall not adversely affect the right of the Company or any of its subsidiaries to terminate the Officer’s employment with or without Cause at any time. Membership on the Company’s Executive Council and Operating Committee shall be determined in the sole discretion of the Company’s President and Chief Executive Officer.
21. | Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to its choice of law provisions. Any proceeding arising out of or relating to this Agreement shall be brought in the courts of the Commonwealth of Massachusetts, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Massachusetts. This provision may be filed with any court as written evidence of the knowing, voluntary, and irrevocable agreement between the Parties to waive any objections to jurisdiction, venue or convenience of forum. |
20. | Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. |
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereto duly authorized, and the Officer has signed this Agreement.
[Remainder of this page intentionally left blank.]
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HAEMONETICS CORPORATION
By: /s/ Richard Meelia
Richard Meelia
Chairman of the Board of Directors
OFFICER
/s/ Christopher A. Simon
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News Release
EXHIBIT 99.1
FOR RELEASE: | INVESTOR CONTACT: | |
Date May 9, 2016 | Gerry Gould, VP-Investor Relations | |
Time 5:00 pm Eastern | (781) 356-9402 | |
MEDIA CONTACT: | ||
Sandra Jesse, Executive VP | ||
(781) 356-9253 | ||
Haemonetics Provides Fiscal 2017 Guidance
Braintree, MA, May 9, 2016 – Haemonetics Corporation (NYSE: HAE) provided guidance for its fiscal year ending April 1, 2017.
The Company follows a fiscal year reporting convention, ending on the Saturday closest to March 31. Under this reporting convention, fiscal 2016 had 53 weeks and fiscal 2017 will have 52 weeks. The extra week in fiscal 2016 provided approximately 1.7% of revenue.
REVENUE
Overall fiscal 2017 revenue is expected to be in a range of $850-$875 million, 4-7% below prior year revenue on a reported basis and down 2-4% in constant currency.
The Company expects strong revenue growth in its identified growth franchises of Plasma and Hemostasis Management, declining revenue in Cell Processing and a double digit percentage revenue decline in its Donor business. Including the 1.7% headwind of one less week in fiscal 2017, franchise revenue guidance follows:
• | Plasma: 7-9% revenue growth as reported or 8-10% in constant currency. |
• | Hemostasis Management: 17-20% revenue growth as reported or 20-23% in constant currency. |
• | Cell Processing: approximately 10% revenue decline as reported or 6% in constant currency, with flat revenue in Cell Saver and growth in BloodTrack HaemoBank more than offset by a continuing decline in OrthoPAT. |
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• | Donor (whole blood, red cell and platelet): 19-23% revenue decline as reported or 16-20% decline in constant currency. |
ADJUSTED EARNINGS
Adjusted gross margin and adjusted operating margin are expected to approximate 45% and 13% of revenue, respectively. Cost savings are expected to enable fiscal 2017 operating earnings to grow by 3-8% on a constant currency basis.
Income taxes are expected to approximate 25-26% of pre-tax adjusted income.
Adjusted earnings per share – excluding restructuring charges, restructuring-related expenses and deal amortization – are expected to be in a range of $1.40-$1.50 per share.
RESTRUCTURING CHARGE, RESTRUCTURING RELATED EXPENSES AND DEAL AMORTIZATION
The Company recently completed a strategic review of its business portfolio and formulated a plan to optimize growth and profitability. For fiscal 2017, that plan includes a repositioning of the Company’s organization and cost structure. Enactment of that plan will include, in fiscal 2017, pre-tax restructuring charges, primarily termination benefits, approximating $17 million; and restructuring-related expenses including exit costs of $9 million. Such anticipated charges and expenses, totaling $26 million pre-tax or $21 million net of tax benefit, were excluded from adjusted earnings estimates provided above.
Acquisition related amortization is expected to approximate $27 million pre-tax or $0.37 per share, and is excluded from adjusted operating income and adjusted earnings per share.
CASH FLOW
Fiscal 2017 free cash flow is expected to approximate $65-$70 million before funding the $21 million of after-tax restructuring charges and restructuring and restructuring related expenses.
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ADDITIONAL INFORMATION AND WEBCAST
More information on fiscal 2017 guidance, including income statement scenarios underlying the lower and upper ends of the adjusted earnings per share guidance range, can be found in the Investor Relations section of the Company’s web site at www.haemonetics.com.
Haemonetics will host a webcast in connection with its annual investor day event on Tuesday, May 10, 2016 at 9:30am Eastern. Additional details underlying guidance assumptions will be discussed. Interested parties may participate at: http://edge.media-server.com/m/p/touv5xdq/lan/en.
ABOUT HAEMONETICS
Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve patient care and reduce the cost of healthcare for blood and plasma collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at www.haemonetics.com.
FORWARD LOOKING STATEMENTS
The Company provides forward-looking statements that could be influenced by risks and uncertainties, including the effects of disruption from the manufacturing transformation making it more difficult to maintain relationships with employees and timely deliver high quality products, changes in executive management, possible changes in operations as a result of our ongoing strategic review, asset revaluations to reflect current business conditions, technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, demand for whole blood and blood components, product quality, market acceptance, regulatory uncertainties, including in the receipt or timing of regulatory approvals, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers’ ordering patterns including single-source tenders, the effect of industry consolidation as seen
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in the plasma and blood center markets, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission.
The foregoing list should not be construed as exhaustive.
Forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements. Information set forth in this press release is current as of today and the Company undertakes no duty or obligation to update this information.
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News Release
EXHIBIT 99.2
FOR RELEASE: | INVESTOR CONTACT: | |
Date May 9, 2016 | Gerry Gould, VP-Investor Relations | |
Time 5:00 pm Eastern | (781) 356-9402 | |
MEDIA CONTACT: | ||
Sandra Jesse, Executive VP | ||
(781) 356-9253 | ||
Haemonetics Corporation Announces Christopher Simon as President and Chief Executive Officer
Braintree, MA, May 9, 2016 – Haemonetics Corporation (NYSE: HAE) a global healthcare company dedicated to providing innovative solutions to our customers, today, announced the appointment of Christopher Simon as President and Chief Executive Officer of the Company. Chris, who currently serves as a Senior Partner of McKinsey & Company where he leads the Global Medical Products Practice, will assume his duties on May 16, 2016.
“With over twenty years of experience consulting in the medical device and pharmaceutical industries, Chris has a proven track record of helping businesses transform and grow,” the Haemonetics Board of Directors said in a statement. “Under Chris’ leadership, we are confident that the Company will grow and innovate to serve our customers worldwide.”
Chris will succeed Ronald Gelbman, who had been serving as interim Chief Executive Officer since September of 2015. Gelbman will continue to serve as a member of the Haemonetics Board of Directors.
“Haemonetics has such a well-earned reputation in plasma collection, donor centers and hospitals, and I am honored to have been chosen to lead this Company,” Simon said. “I
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look forward to advancing the strategic plan developed with the Haemonetics leadership team and Board of Directors to drive Haemonetics towards a bright future.”
Simon has been the Lead Partner for McKinsey & Company’s current strategy review with Haemonetics providing him with insight into the current state of the business as well as the strategies for the future of Haemonetics. He has been with McKinsey & Company since 1993, prior to that, he served in commercial roles with Baxter Healthcare Corporation.
He holds a Bachelor of Science in Economics from The Wharton School at The University of Pennsylvania and an MBA from Harvard Business School.
ABOUT HAEMONETICS
Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve patient care and reduce the cost of healthcare for blood and plasma collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.
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