FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the quarter ended: June 29, 2002 Commission File Number: 1-10730
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HAEMONETICS CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2882273
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No)
400 Wood Road, Braintree, MA 02184
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(Address of principal executive offices)
Registrant's telephone number, including area code: (781) 848-7100
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Indicate by check mark whether the registrant (1.) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) (2.) has been subject to the
filing requirements for at least the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
24,867,500 shares of Common Stock, $ 01 par value, as of
----------------------------------------------------------
June 29, 2002
HAEMONETICS CORPORATION
INDEX
PAGE
----
PART I. Financial Information
Unaudited Consolidated Statements of Income- 2
Three Months Ended June 29, 2002 and June 30, 2001
Unaudited Consolidated Balance Sheets - June 29, 2002 3
and March 30, 2002
Unaudited Consolidated Statement of Stockholders' Equity - 4
Three Months Ended June 29, 2002
Unaudited Consolidated Statements of Cash Flows - 5
Three Months Ended June 29, 2002 and June 30, 2001
Notes to Unaudited Consolidated Financial Statements 6-12
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-19
Quantitative and Qualitative Disclosures about Market Risk 19-20
PART II. Other Information 21
Signatures 22
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except share data)
Three Months Ended
---------------------
June 29, June 30,
2002 2001
-------- --------
Net revenues $81,935 $75,801
Cost of goods sold 43,288 39,490
------- -------
Gross profit 38,647 36,311
Operating expenses:
Research and development 4,939 4,814
Selling, general and administrative 24,016 21,965
------- -------
Total operating expenses 28,955 26,779
------- -------
Operating income 9,692 9,532
Interest expense (877) (982)
Interest income 441 1,088
Other income, net 563 973
------- -------
Income before provision for income taxes 9,819 10,611
Provision for income taxes 3,044 2,971
------- -------
Income before cumulative effect of change
in accounting principle 6,775 7,640
Cumulative effect of change in accounting
principle, net of tax -- 2,304
------- -------
Net income $ 6,775 $ 9,944
======= =======
Basic income per common share
Income before cumulative effect of change
in accounting principle $ 0.27 $ 0.29
Cumulative effect of change in accounting
principle, net of tax -- 0.09
Net income 0.27 0.38
Income per common share assuming dilution
Income before cumulative effect of change
in accounting principle $ 0.26 $ 0.28
Cumulative effect of change in accounting
principle, net of tax -- 0.09
Net income 0.26 0.37
Weighted average shares outstanding
Basic 25,318 25,979
Diluted 26,110 26,947
The accompanying notes are an integral part of these consolidated financial
statements.
2
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share data)
June 29, March 30,
2002 2002
-------- ---------
ASSETS
Current assets:
Cash and short term investments $ 42,006 $ 34,913
Available-for-sale investments -- 32,636
Accounts receivable, less allowance of $1,347
at June 29, 2002 and $1,298 at March 30, 2002 69,417 63,743
Inventories 74,444 67,244
Current investment in sales-type leases, net 2,700 2,783
Deferred tax asset 23,046 18,943
Other prepaid and current assets 10,342 12,573
-------- --------
Total current assets 221,955 232,835
-------- --------
Property, plant and equipment 229,286 218,819
Less accumulated depreciation 143,440 133,942
-------- --------
Net property, plant and equipment 85,846 84,877
Other assets:
Investment in sales-type leases, net (long-term) 3,034 3,234
Other intangibles, less accumulated
amortization of $2,418 at June 29, 2002
and $1,977 at March 30, 2002 23,853 24,204
Goodwill, net 15,021 14,168
Deferred tax asset 1,842 2,275
Other long-term assets 3,521 3,328
-------- --------
Total other assets 47,271 47,209
-------- --------
Total assets $355,072 $364,921
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of
long-term debt $ 36,369 $ 31,356
Accounts payable 12,309 12,536
Accrued payroll and related costs 10,684 12,696
Accrued income taxes 13,282 11,355
Other accrued liabilities 21,558 16,155
-------- --------
Total current liabilities 94,202 84,098
-------- --------
Long-term debt, net of current maturities 38,430 40,787
Other long-term liabilities 3,674 3,212
Stockholders' equity:
Common stock, $.01 par value; Authorized -
80,000,000 shares; Issued 31,535,811 shares
at June 29, 2002; 31,453,511 shares at
March 30, 2002 315 315
Additional paid-in capital 106,282 104,261
Retained earnings 271,367 264,592
Accumulated other comprehensive loss (17,473) (16,395)
-------- --------
Stockholders' equity before treasury stock 360,491 352,773
Less: treasury stock 6,668,311 shares at cost
at June 29, 2002 and 5,812,943 shares at
cost at March 30, 2002 141,725 115,949
-------- --------
Total stockholders' equity 218,766 236,824
-------- --------
Total liabilities and stockholders' equity $355,072 $364,921
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited data, in thousands)
Accumulated
Common Stock Additional Other Total Compre-
-------------- Paid-in Treasury Retained Comprehensive Stockholders' hensive
Shares $'s Capital Stock Earnings Loss Equity Income
------ --- ---------- -------- -------- ------------- ------------- -------
Balance, March 30, 2002 31,454 $315 $104,261 $(115,949) $264,592 $(16,395) $236,824
================================================================================
Employee stock purchase plan -- -- 105 256 -- -- 361
Exercise of stock options
and related tax benefit 82 -- 1,916 -- -- -- 1,916
Purchase of treasury stock -- -- -- (26,032) -- -- (26,032)
Net income -- -- -- -- 6,775 -- 6,775 $ 6,775
Foreign currency translation
adjustment -- -- -- -- -- 5,409 5,409 5,409
Unrealized loss on derivatives (6,487) (6,487) (6,487)
--------
Comprehensive income -- -- -- -- -- -- -- $ 5,697
-------------------------------------------------------------------------------- =======
Balance, June 29, 2002 31,536 $315 $106,282 $(141,725) $271,367 $(17,473) $218,766
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
4
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited- in thousands)
Three Months Ended
----------------------
June 29, June 30,
2002 2001
-------- --------
Cash Flows from Operating Activities:
Net income $ 6,775 $ 9,944
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Non cash items:
Depreciation and amortization 7,064 5,837
Deferred tax expense 134 1,868
Tax benefit related to the exercise of
stock options 356 --
Gain from exchange activities (1,803) (3,420)
Change in operating assets and liabilities:
Increase in accounts receivable - net (907) (2,167)
Increase in inventories (7,394) (4,556)
Decrease in sales-type leases (current) 153 64
Increase in prepaid income taxes (229) (122)
(Increase) decrease in other assets (1,117) (3,447)
Decrease in accounts payable, accrued
expenses and other current liabilities (1,764) (1,415)
-------- --------
Net cash provided by operating activities 1,268 2,586
Cash Flows from Investing Activities:
Purchases of available-for-sale investments (11,670) (23,580)
Gross proceeds from sale of available-for
-sale investments 44,306 11,167
Capital expenditures on property, plant and
equipment, net of retirements and disposals (2,762) (3,999)
Net decrease in sales-type leases (long-term) 270 1,581
-------- --------
Net cash provided (used) by investing
activities 30,144 (14,831)
-------- --------
Cash Flows from Financing Activities:
Payments on long-term real estate mortgage (314) (86)
Net increase in short-term revolving
credit agreements 2,107 5,844
Net (decrease) increase in long-term credit
agreements (2,384) 89
Employee stock purchase plan purchases 361 250
Exercise of stock options 1,560 5,805
Purchase of treasury stock (26,032) --
-------- --------
Net cash (used) provided by financing
activities (24,702) 11,902
Effect of exchange rates on cash and cash
equivalents 383 (139)
-------- --------
Net increase (decrease) in cash and cash
equivalents 7,093 (482)
Cash and cash equivalents at beginning of period 34,913 41,441
-------- --------
Cash and cash equivalents at end of period $ 42,006 $ 40,959
======== ========
Non-cash investing and financing activities:
Transfers from inventory to fixed assets for
Haemonetics placement equipment $ 3,133 $ 1,767
Supplemental disclosures of cash flow information:
Interest paid $ 1,415 $ 1,628
Income taxes paid $ 778 $ 2,480
The accompanying notes are an integral part of these consolidated financial
statements.
5
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. All significant
intercompany transactions have been eliminated. For further information,
refer to the audited consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the fiscal year
ended March 30, 2002.
Certain amounts in the prior year financial statements have been
reclassified to conform to the fiscal year 2003 presentation.
The Company's fiscal year ends on the Saturday closest to the last day
of March. Both fiscal year 2003 and 2002 include 52 weeks with the first
quarter of each fiscal year including 13 weeks.
2. ACCOUNTING FOR SHIPPING AND HANDLING COSTS
In accordance with Emerging Issues Task Force No. 00-10, ("EITF 00-
10",) "Accounting for Shipping and Handling Fees and Costs," amounts billed
to the Company's customers in sale transactions for shipping and handling
are recorded as revenue. All other shipping and handling costs are included
in costs of goods sold with the exception of $1.3 million and $1.0 million
for three months ended June 29, 2002 and June 30, 2001, respectively that
are included in selling, general and administrative expenses.
3. FOREIGN CURRENCY
The Company enters into forward exchange contracts to hedge the
anticipated cash flows from forecasted foreign currency denominated
revenues. The purpose of the Company's foreign hedging activities is to
minimize, for a period of time, the unforeseen impact on the Company's
results of operations of fluctuations in foreign exchange rates. The Company
also enters into forward contracts that settle within 35 days to hedge
certain inter-company receivables denominated in foreign currencies. These
derivative financial instruments are not used for trading purposes. The
cash flows related to the gains and losses on these foreign currency hedges
are classified in the consolidated statements of cash flows as part of cash
flows from operating activities.
On April 1, 2001, in accordance with SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" and SFAS No.
138 "Accounting for Certain Derivative Instruments and Hedging Activities,
an Amendment of FASB Statement No. 133," (collectively, SFAS No. 133, as
amended) effective April 1, 2001. These standards were adopted as a change
in accounting principle and cannot be applied retroactively to financial
statements of prior periods.
At adoption, the Company recorded the fair value of these contracts of
$9.2 million as an asset on the balance sheet. At adoption, the change in
the fair value of the contracts associated with changes in the spot rate as
of April 1, 2001 of $4.6 million was recorded in other comprehensive income
($6.4 million less taxes of $1.8 million). At adoption, the change in the
fair value of the points associated with forward contracts, which are
excluded from the Company's assessment of hedge effectiveness, totaled $2.3
million ($3.2 million less taxes of $0.9 million). This amount was recorded
as a cumulative effect of a change in accounting principle.
6
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
At June 29, 2002, the Company had 28 forward contracts outstanding,
all maturing in less than twelve months, to exchange Euro and the Japanese
yen primarily for U.S. dollars totaling $116.1 million. Of these contracts,
six, totaling $35.3 million, represented contracts with zero fair value
relating to inter-company receivables established at quarter-end, that
settle within 35 days after quarter-end. The Company has designated the
remainder of these contracts as cash flow hedges intended to lock-in the
expected cash flows of forecasted foreign currency denominated revenues at
the available spot rate. The fair value of the forward contracts associated
with changes in points on forward contracts is excluded from the Company's
assessment of hedge effectiveness.
At June 29, 2002, the fair value of the forward contract liability was
$5.6 million. For the three months ended June 29, 2002, a $6.5 million loss
was recorded in accumulated other comprehensive loss, ($10.3 million loss
less tax benefit of $3.8 million.) The change in the fair value
attributable to points on forward contracts totaled approximately $0.5
million for the three months ended June 29, 2002. This $0.5 of income was
excluded from the assessment of hedge effectiveness and was recorded as part
of other income, net for the three months ended June 29, 2002 in the
Company's unaudited consolidated statement of income. For the three months
ended June 30, 2001, income from points on forward contracts, included in
other income, net was $1.0 million.
A summary of the accounting discussed above is as follows (in
thousands):
Accumulated
(Income)/Expense Comprehensive
Cash Flow Hedges-Debit Asset (Liability)- (Income) Loss, Other Income,
(Credit) Forward Contracts net of tax net
---------------------- ------------------ -------------- -------------
Balance as of March 30, 2002 $ 3,983 $(2,287)
Change in fair value for the
3 months ended June 29, 2002 (9,554) 6,487 (463)
------- ------- -----
Total $(5,571) $ 4,200 $(463)
4. NEW PRONOUNCEMENTS
In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-
lived assets and the associated asset retirement costs. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning after
June 15, 2002. Management believes the adoption of SFAS No. 143 will not
have a material impact on the Company's results of operations or financial
position.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement supercedes
FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." SFAS No. 144 retains many of the fundamental provisions of
SFAS No. 121 and establishes a single accounting model, based on the
framework established in SFAS No. 121, for long-lived assets to be disposed
of by sale, whether previously held and used or
7
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
newly acquired, and it broadens the presentation of discontinued operations
to include more disposal transactions. SFAS No. 144 is not applicable to
goodwill or intangible assets that are not being amortized, and certain
other long-lived assets. The provisions of SFAS No. 144 are effective for
the Company on March 31, 2002, the beginning of its 2003 fiscal year. Upon
adoption, this statement did not have a significant impact on the Company's
financial position or results of operations.
5. Acquired Other Intangible Assets
A breakdown of the Company's intangible assets by asset class is as
follows:
As of June 29, 2002
- -------------------
Weighted
Gross Carrying Accumulated Average
Amount Amortization Useful Life
(in thousands) (in thousands) (in years)
-------------- -------------- -----------
Amortized Intangibles
- ---------------------
Patents $ 6,370 $ 763 14
Developed technology 7,994 874 17
Customer contracts and related
relationships 11,433 781 15
------- ------ --
Subtotal $25,797 $2,418 15
Indefinite Life Intangibles
- ---------------------------
Trade name 474 -- Indefinite
------- ------
Total Intangibles $26,271 $2,418
8
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
As of March 30, 2002
- --------------------
Weighted
Gross Carrying Accumulated Average
Amount Amortization Useful Life
(in thousands) (in thousands) (in years)
-------------- -------------- -----------
Amortized Intangibles
- ---------------------
Patents $ 6,370 $ 647 14
Developed technology 7,991 741 17
Customer contracts and related
relationships 11,350 589 15
------- ------ --
Subtotal $25,711 $1,977 15
Indefinite Life Intangibles
- ---------------------------
Trade name 470 -- Indefinite
------- ------
Total Intangibles $26,181 $1,977
The only change to the net carrying value of the Company's intangible
assets from March 30, 2002 to June 29, 2002 was amortization expense and the
effect of rate changes in the translation of the intangibles contained in
the financial statement of the Company's Canadian subsidiary.
Aggregate amortization expense for amortized other intangible assets
for the three months ended June 29, 2002 and for the twelve months ended
March 30, 2002 is $0.4 million and $1.4 million, respectively.
Additionally, the anticipated annual amortization expense on other
intangible assets approximates $1.8 million for fiscal years 2003 through
2007 and $1.7 million for fiscal year 2008.
With the adoption of SFAS No. 142, there were no changes to
amortization expense on acquired other intangible assets.
6. GOODWILL
During the three months ended June 29, 2002, no event or circumstance
change occurred to impair the Company's goodwill or indefinite life assets.
The change in the carrying value of goodwill during the three months ended
June 29, 2002 is attributable solely to the effects of rate changes in the
translation of the goodwill contained in the financial statements of foreign
subsidiaries.
9
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
The changes in the carrying amount of the Company's goodwill during
the three months ended June 29, 2002 are as follows (in thousands):
Carrying amount as of March 30, 2002 $14,168
Effect of change in rates used for translation 853
-------
Carrying amount as of June 29, 2002 $15,021
=======
7. INVENTORIES
Inventories are stated at the lower of cost or market and include the
cost of material, labor and manufacturing overhead. Cost is determined on
the first-in, first-out method.
Inventories consist of the following:
June 29, 2002 March 30, 2002
------------- --------------
(in thousands)
Raw materials $20,037 $16,808
Work-in-process 4,971 4,700
Finished goods 49,436 45,736
------- -------
$74,444 $67,244
======= =======
8. NET INCOME PER SHARE
The following table provides a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations, as
required by SFAS No. 128, "Earnings Per Share." Basic EPS is computed by
dividing reported earnings available to stockholders by weighted average
shares outstanding. Diluted EPS includes the effect of potential dilutive
common shares.
For the three months ended
--------------------------------
June 29, 2002 June 30, 2001
------------- -------------
Basic EPS
Net income $ 6,775 $ 9,944
Weighted average shares 25,318 25,979
------- -------
Basic income per share $ 0.27 $ 0.38
======= =======
10
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
Diluted EPS
Net income $ 6,775 $ 9,944
Basic weighted average shares 25,318 25,979
Effect of stock options 792 968
------- -------
Diluted weighted average shares 26,110 26,947
Diluted income per share $ 0.26 $ 0.37
9. COMMITMENTS AND CONTINGENCIES
The Company is presently engaged in various legal actions, and
although ultimate liability cannot be determined at the present time, the
Company believes, based on consultation with counsel, that any such
liability will not materially affect the consolidated financial position of
the Company or its results of operations.
Through its acquisition of Fifth Dimension Information Systems, Inc.
(Fifth Dimension), as well as its agreement with Baxter Healthcare
Corporation (Baxter) related to pathogen inactivation technology, the
Company is contingently obligated to make certain payments. The Fifth
Dimension acquisition involves certain earn-out payments of up to $4.1
million based upon Fifth Dimension reaching certain performance milestones
prior to fiscal 2006. The Baxter agreement calls for the Company to make
additional milestone payments of up to $14.5 million over the next several
years as regulatory approvals are received in various markets.
10. SEGMENT INFORMATION
Segment Definition Criteria
The Company manages its business on the basis of one operating
segment: the design, manufacture and marketing of automated blood processing
systems. Haemonetics' chief operating decision-maker uses consolidated
results to make operating and strategic decisions. Manufacturing processes,
as well as the regulatory environment in which the Company operates, are
largely the same for all product lines.
Product and Service Segmentation
The Company's principal product offerings include blood bank, red
cell, surgical and plasma collection products.
The blood bank products include machines, single use disposables and
solutions that perform "apheresis," (the separation of whole blood into its
components and subsequent collection of certain components, including
platelets and plasma), as well as the washing of red blood cells for certain
procedures. In addition, the blood bank product line includes solutions
used in non-apheresis applications. The main devices used for these blood
component therapies are the MCS(R)+, mobile collection system and the
ACP(TM) 215 automated cell processing system.
Red cell products include machines and single use disposables and I.V.
solutions that perform apheresis for the collection of red blood cells.
Devices used for the collection of red blood cells are the MCS(R)+, mobile
collection systems.
11
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--continued
Surgical products include machines, and single use disposables that
perform surgical blood salvage in orthopedic and cardiovascular surgical
applications. Surgical blood salvage is a procedure whereby shed blood is
collected, cleansed and made available to be transfused back to the patient.
The devices used in the surgical area are the OrthoPAT(R) System, and a
full line of Cell Saver(R) autologous blood recovery systems.
Plasma collection products are machines, disposables, solutions and
software that perform apheresis for the separation of whole blood components
and subsequent collection of plasma. The device used in automated plasma
collection is the PCS(R)2 plasma collection system.
Three months ended (in thousands)
June 29, 2002
- -------------
Blood Bank Red Cells Surgical Plasma Other Total
---------- --------- -------- ------ ----- -----
Revenues from external customers $26,741 3,624 18,332 29,495 3,743 81,935
June 30, 2001
- -------------
Revenues from external customers $26,038 2,431 17,467 27,023 2,842 75,801
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The table outlines the components of the consolidated statements of
income from operations as a percentage of net revenues:
Percentage Increase/(Decrease)
Percentage of Net Revenues Three Months Ended
Three Months Ended (in actual dollars)
June 29, 2002 June 30, 2001 2001/2000
------------- ------------- ------------------------------
Net revenues 100.0% 100.0% 8.1%
Cost of goods sold 52.9 52.1 9.6
--------------------------------------------------
Gross Profit 47.1 47.9 6.4
--------------------------------------------------
Operating Expenses:
Research and development 6.0 6.3 2.6
Selling, general and administrative 29.3 29.0 9.3
--------------------------------------------------
Total operating expenses 35.3 35.3 8.1
--------------------------------------------------
Operating income 11.8 12.6 1.7
Interest expense (1.1) (1.3) (10.7)
Interest income 0.6 1.4 (59.5)
Other income, net 0.7 1.3 (42.1)
--------------------------------------------------
Income before provision for income taxes 12.0 14.0 (7.5)
Provision for income taxes 3.7 3.9 2.5
--------------------------------------------------
Income before cumulative effect of change
in accounting principle, net of tax 8.3 10.1 (11.3)
--------------------------------------------------
Cumulative effect of change in accounting
principle, net of tax --- 3.0 (100.0)
--------------------------------------------------
Net income 8.3% 13.1% (31.9)%
==================================================
Three Months Ended June 29, 2002 Compared to
Three Months Ended June 30, 2001
Percent Increase / (Decrease)
-----------------------------
Actual dollars At constant
By geography: 2002 2001 as reported currency
- ------------- ---- ---- -------------- -----------
United States $30,935 $28,888 7.1% 7.1%
International 51,000 46,913 8.7 13.7
------------------------------------------------
Net revenues 81,935 $75,801 8.1% 11.1%
13
Percent Increase / (Decrease)
-----------------------------
Actual dollars At constant
By product type: 2002 2001 as reported currency
- ---------------- ---- ---- -------------- -----------
Disposables $73,433 $70,525 4.1% 7.2%
Misc. & service 3,743 2,842 31.7 32.5
Equipment 4,759 2,434 95.5 93.4
------------------------------------------------
Net revenues $81,935 $75,801 8.1% 11.1
Percent Increase / (Decrease)
-----------------------------
Actual dollars At constant
By product line: 2002 2001 as reported currency
- ---------------- ---- ---- -------------- -----------
Surgical $17,200 $16,505 4.2% 5.5%
Blood bank 24,185 24,731 (2.2) 3.1
Red cells 3,381 2,403 40.7 39.6
Plasma 28,667 26,886 6.6 8.9
------------------------------------------------
Disposable revenues $73,433 $70,525 4.1 7.2
Three months ended June 29, 2002(fiscal 2003) compared
to three months ended June 30, 2001 (fiscal 2002)
Net Revenues
Net revenues in fiscal 2003 increased 8.1% to $81.9 million from $75.8
million in fiscal 2002. With currency rates held constant, net revenues
increased 11.1%. The increase in revenues was partially offset by a
reduction in the spot rate gains realized on forward contracts recorded in
revenues.
Disposable sales increased 4.1% year over year at actual rates and
with currency rates held constant, disposable sales increased 7.2%. Year
over year constant currency disposable sales growth was a result of growth
in worldwide Surgical (up 5.5%), worldwide Bloodbank (up 3.1%) worldwide Red
Cell (up 39.6%), and worldwide Plasma sales (up 8.9%). The constant
currency growth in the worldwide Surgical disposable sales is mainly
attributed to volume increases of existing products and from the Company's
OrthoPAT(R) product in the U.S. orthopedic market. Worldwide Bloodbank
disposable sales increased as compared to 2002 as a result of volume
increases in platelet disposable sales in Japan and Asia. The growth in
worldwide Red Cell sales is attributed to volume increases in the U.S. as
the supply of red cells continues to tighten due to blood shortages and
recently adopted donor deferral regulations mandated by the U.S. Food and
Drug Administration. The growth in worldwide Plasma disposables sales is
attributed to volume increases of products sold in Japan, Asia and Europe.
In the U.S., plasma disposable sales decreased 4.4% due to declining sales to
one customer as a result of industry consolidation while industry collection
continued to grow.
At actual rates, sales of disposable products, excluding service and
other miscellaneous revenue, accounted for approximately 89.6% and 93.0% of
net revenues for fiscal 2003 and 2002, respectively. Constant currency
sales of disposable products, excluding service and other miscellaneous
revenue, accounted for approximately 89.5% and 92.8 % of net revenues for
fiscal 2003 and 2002, respectively.
Service revenue generated from equipment repairs performed under
preventive maintenance contracts or emergency service billings and
miscellaneous revenues, including software revenue from the Company's newly
14
acquired software company, Fifth Dimension, accounted for 4.6% and 3.7% of
the Company's net revenues, at actual rates, for fiscal year 2003 and 2002,
respectively. At constant currency, these sales accounted for 4.6% and 3.9%
of the Company's net revenues for fiscal 2003 and 2002, respectively. This
increase is due to the software revenues of Fifth Dimension in 2003.
Equipment revenues increased 95.5% from $2.4 million in fiscal 2002 at
actual rates and increased 93.4% year over year with currency rates held
constant. The 93.4% constant currency increase is primarily attributable to
sales of platelet and plasma machines in Japan and Europe and the new ACP
215 system domestically. Most of our equipment sales occur in our
international markets, as in the U.S. we generally place equipment with a
customer, in exchange for an agreement by the customer to purchase our
disposables. Due to the variable nature of equipment sales, the Company
gives no assurance as to whether or not these significant increases will
continue in the foreseeable future.
At actual rates, international sales as reported accounted for
approximately 62% of net revenues for both fiscal 2003 and 2002. As in the
U.S., sales outside the U.S. are susceptible to risks and uncertainties from
regulatory changes, the Company's ability to forecast product demand and
market acceptance of the Company's products, changes in economic conditions,
the impact of competitive products and pricing and changes in health care
policy.
Gross profit
Gross profit of $38.6 million for fiscal 2003 increased $2.3 million
from $36.3 million for fiscal 2002. With currency rates held constant,
gross profit increased by 16.1%, or $5.3 million, and increased as a
percentage of sales by 2.0%. The $5.3 million constant currency gross
profit increase from fiscal 2002 was a result of the 11.1% or $8.1 million
increase in constant currency revenues and cost reductions.
In 1998, the Company initiated the Customer Oriented Redesign for
Excellence ("CORE") Program to increase operational effectiveness and
improve all aspects of customer service. The CORE Program is based on Total
Quality of Management, ("TQM") principals, and the program aims to increase
the efficiency and the quality of processes and products, and to improve the
quality of management at Haemonetics. For the first three months of fiscal
2003, the CORE program generated $1.3 million of cost savings benefiting the
Company's gross profit from initiatives to lower product costs by automating
and redesigning the way certain products are made and by negotiating reduced
raw material prices from suppliers.
Expenses
The Company expended $4.9 million, 6.0% of net revenues, on research
and development for fiscal 2003 and $4.8 million, 6.3% of net revenues, for
fiscal 2002. At constant currency rates, research and development as a
percentage of sales decreased 0.3% from fiscal 2002 to fiscal 2003 remaining
relatively flat in dollars.
Selling, general and administrative expenses increased $2.0 million in
fiscal 2003 to $24.0 million from $22.0 million in fiscal 2002. At constant
currency rates, selling, general and administrative expenses increased $2.1
million, however decreased as a percent of net revenues by 0.4% to 29.6% due
to the Company's higher sales. The increased spending behind the Company's
new product sales and marketing activities contributed to the dollar
increase in selling, general and administrative dollars.
Operating Income
Operating income for the first quarter of fiscal 2003, as a percentage
of net revenues, decreased 0.8 percentage points to 11.8% in fiscal 2003
from 12.6% in fiscal 2002. At constant currency rates, operating income
increased by $3.1 million. The $3.1 million increase in operating income
resulted largely from the constant currency improvements in gross profit
year over year partially offset by the increases in selling, general and
administrative expenses.
Foreign Exchange
The Company generates 62% of its revenues outside the U.S. in foreign
currencies. As such, the Company uses a combination of business and
financial tools comprised of various natural hedges (offsetting exposures
from local production costs and operating expenses) and forward contracts to
hedge its balance sheet and P&L exposures. Hedging through the use of
forward contracts does not eliminate the volatility of foreign exchange
rates, but
15
because the Company generally enters into forward contracts one year out,
rates are fixed for a one-year period, thereby facilitating financial
planning and resource allocation.
The Company computes a composite rate index for purposes of measuring,
comparatively, the change in foreign currency hedge spot rates from the
hedge spot rates of the corresponding period in the prior year. The
relative value of currencies in the index corresponds to the value of sales
in those currencies. The composite was set at 1.00 based upon the weighted
rates at March 31, 1997.
For the first quarter of fiscal 2003, the indexed hedge spot rates
depreciated 8.9% and for the first quarter of fiscal 2004, the indexed hedge
spot rates depreciated 3.6% over the corresponding quarter of the preceding
years. These indexed hedge rates represent the change in spot value (value
on the day the hedge contract is undertaken) of the Haemonetics specific
hedge rate index. These indexed hedge rates impact sales in the Company's
financial statements. The final impact of currency fluctuations on the
results of operations is dependent on the local currency amounts hedged and
the actual local currency results.
Composite Index Favorable / (Unfavorable)
Hedge Spot Rates Change vs Prior Year
---------------- -------------------------
FY2001 Q1 1.04 5.4%
Q2 1.00 8.2%
Q3 0.92 12.9%
Q4 0.97 10.2%
2001 Total 0.98 9.1%
FY2002 Q1 0.99 5.2%
Q2 0.97 3.3%
Q3 1.01 (8.6%)
Q4 1.05 (7.5%)
2002 Total 1.00 (2.0%)
FY2003 Q1 1.09 (8.9%)
Q2 1.08 (10.3%)
Q3 1.10 (8.1%)
Q4 1.17 (11.0%)
2003 Total 1.11 (9.5%)
FY2004 Q1 1.13 (3.6%)
2004 Total 1.13 (1.5%)
Other Income, Net
Interest expense for fiscal 2003 was relatively flat as compared to
fiscal 2002 as nearly 100% of the Company's long-term debt is at fixed
rates. Interest income decreased $0.7 million from 2002 to 2003, due
primarily to lower average balances of cash available to invest and lower
investment yields. Other income, net decreased $0.4 million from fiscal
2002 to fiscal 2003 due to decreases in income earned from points on forward
contracts, which was partially offset by an increase in foreign exchange
transaction gains. Points on forward contracts are amounts, either paid or
earned, based on the interest rate differential between two foreign
currencies in a forward hedge contract.
Taxes
The income tax provision, as a percentage of pretax income, was 31.0%
for the first quarter of fiscal 2003 and 28.0% for the first quarter of
fiscal 2002. The increase in the effective tax rate is primarily
attributable to reduced export tax benefits.
16
Cumulative Effect of Accounting Change, Net of Tax
In accordance with Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," the Company
adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No. 138 "Accounting for Certain Derivative Instruments
and Hedging Activities, an Amendment of FASB Statement No. 133,"
(collectively, SFAS No. 133, as amended) effective, April 1, 2001, the
beginning of the Company's 2002 fiscal year. As required, these standards
were adopted as a change in accounting principle and accordingly, the effect
at adoption of $3.2 million was shown net of taxes of $0.9 million as a
cumulative effect of a change in accounting principle on the face of the
consolidated statements of operations in the three months ended June 30,
2001.
Liquidity and Capital Resources
The Company's primary sources of capital include cash and short term
investments, internally generated cash flows and bank borrowings. The
Company believes these sources to be sufficient to fund its requirements,
which are derived primarily from capital expenditures, acquisitions, new
business development, share repurchase and working capital.
During the first quarter of fiscal 2003, the Company funded its
activities primarily with $1.3 million of cash flows generated by
operations, $44.3 million of gross proceeds from the sale of available-for-
sale securities and $1.6 million in stock option proceeds.
Working capital for the first quarter of fiscal 2003 was $127.8
million. This reflects a decrease of $30.2 million in working capital from
the first quarter of fiscal 2002, largely due to increases in short-term
borrowings and accrued expenses and decreases in available-for-sale
investments, offset by an increase in inventories and accounts receivable.
The increase of $6.7 million in cash and short term investments during
the first quarter of fiscal 2003 from operating, investing and financing
activities before the effect of exchange rates represents an increase in
cash flow of $7.0 million compared to the $0.3 million in cash generated
during the first quarter of fiscal 2002. The $7.0 million increase was a
result of more cash generated from the net proceeds of available-for-sale
investments offset by purchases of treasury stock.
Operating Activities:
The Company generated $1.3 million in cash from operating activities
during the first quarter of fiscal 2003 as compared to $2.6 million
generated during the first quarter of fiscal 2002. The $1.3 million
decrease in operating cash flow from fiscal 2003 to fiscal 2002 was a result
of a $2.8 million increase in inventories due to higher raw material, work
in process and finished good levels needed to support new product sales, a
$2.3 million increase in other assets, a $0.3 million decrease in accounts
payable, accrued expenses and other current liabilities in 2003 offset by
$1.3 million less cash utilized by accounts receivable increases and a $1.7
million increase in net income adjusted for depreciation, amortization and
other non-cash items.
The Company measures its performance using an operating cash flow
metric defined as net income adjusted for depreciation, amortization and
other non-cash items; capital expenditures for property, plant and equipment
together with the investment in Haemonetics equipment at customer sites,
including sales-type leases; and the change in operating working capital,
including change in accounts receivable, inventory, accounts payable and
accrued expenses, excluding tax accounts and the effects of currency
translation. This alternative measure of operating cash flows is a non-
GAAP measure that may not be comparable to similarly titled measures
reported by other companies. It is intended to assist readers of the report
who employ "free cash flow" and similar measures that do not include tax
assets and liabilities, equity investments and other sources and uses that
are outside the day-to-day activities of a company.
17
As measured by the Company's operating cash flow metric, the Company
generated $0.7 million and $4.8 million of operating cash during the first
quarter of fiscal 2003 and fiscal 2002, respectively. The $0.7 million of
operating cash flow for the first quarter of fiscal 2003 resulted from $7.6
million of net income adjusted for non-cash items and $3.9 million from the
reduction of the Company's net investment in property, plant and equipment
and sales-type leases. Offsetting these was $10.8 million from increased
working capital investment, primarily an increase in inventories of $7.4
million, a $0.9 million increase in accounts receivable and a decrease in
accounts payable and accrued expenses of $2.5 million. The $4.7 million of
operating cash flow generated for first quarter of fiscal 2002 resulted from
$11.0 million of net income adjusted for non-cash items and $3.3 million
from the reduction of the Company's net investment in property, plant and
equipment and sales-type leases offset by $9.6 million from increased
working capital investment, primarily due to higher inventories, higher
accounts receivable and lower accrued payables and payroll. The working
capital and capital investment components of the Company's operating cash
flow metric have been adjusted by non-cash transfers (transfers from
inventory to property, plant and equipment), which amounted to approximately
$3.1 million and $1.8 million for the first quarter of fiscal 2003 and 2002,
respectively.
Investing Activities:
Net cash provided by investing activities totaled $30.1 million for
the first quarter of fiscal 2003, as compared to net cash utilized of $13.8
million during the first quarter of fiscal 2002. This change of $43.9
million was primarily due to the liquidation of the Company's available-for-
sale investments. The Company sold its available-for-sale investments due
to changes in the interest rate environment.
Financing Activities:
Net cash used for financing activities totaled $24.7 million for the
first quarter of fiscal 2003 as compared to net cash provided of $11.9
million for the first quarter of fiscal 2002. The $36.6 million decrease in
cash from financing activities was a result of an additional $26.0 million
spent in the first quarter of fiscal 2003 to repurchase Company stock, $6.2
million from changes in debt and $4.2 million from fewer stock option
exercises in fiscal 2003 than in fiscal 2002. In the first quarter of fiscal
2003, the Company repurchased 868,200 shares of outstanding common stock for
approximately $26.0 million, which is an average market price of $29.98 per
share. The Company expects any repurchased shares to be made available for
issuance pursuant to its employee benefit and incentive plans and for other
corporate purposes. The $6.2 million change in cash from 2002 to 2003
associated with debt was a result of significant changes in foreign exchange
rates in fiscal 2003 and fiscal year 2002 increases in Japan debt.
Inflation
The Company does not believe that inflation has had a significant
impact on the Company's results of operations for the periods presented.
Historically, the Company believes it has been able to minimize the effects
of inflation by improving its manufacturing and purchasing efficiency, by
increasing employee productivity and by reflecting the effects of inflation
in the selling prices of new products it introduces each year.
Cautionary Statement Regarding Forward-Looking Information
Statements contained in this report, as well as oral statements made
by the Company that are prefaced with the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," "designed" and
similar expressions, are intended to identify forward looking statements
regarding events, conditions and financial trends that may affect the
Company's future plans of operations, business strategy, results of
operations and financial position. These statements are based on the
Company's current expectations and estimates as to prospective events and
circumstances about which the Company can give no firm assurance. Further,
any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date
on which such statement is made. As it is not possible to predict every new
factor that may emerge, forward-looking statements should not be relied upon
as a prediction of actual future financial condition or results. These
forward-looking statements, like any forward-looking statements, involve
risks and uncertainties that could cause actual results to differ materially
from those projected or anticipated. Such risks and uncertainties include
technological advances in the medical field and the Company's ability to
successfully implement products that incorporate such advances, product
demand and market acceptance of the Company's products, regulatory
uncertainties, the effect of economic conditions, the impact of
18
competitive products and pricing, foreign currency exchange rates, changes
in customers' ordering patterns and the effect of uncertainties in markets
outside the U.S. (including Europe and Asia) in which the Company operates.
The foregoing list should not be construed as exhaustive.
Quantitative and qualitative disclosures about market risk
The Company's exposures relative to market risk are due to foreign
exchange risk and interest rate risk.
Foreign exchange risk
Approximately 62% of the Company's revenues are generated outside the
U.S., yet the Company's reporting currency is the U.S. dollar. Foreign
exchange risk arises because the Company engages in business in foreign
countries in local currency. Exposure is partially mitigated by producing
and sourcing product in local currency. Accordingly, whenever the US dollar
strengthens relative to the other major currencies, there is an adverse
affect on the Company's results of operations and alternatively, whenever
the U.S. dollar weakens relative to the other major currencies there is a
positive effect on the Company's results of operations.
It is the Company's policy to minimize for a period of time, the
unforeseen impact on its results of operations of fluctuations in foreign
exchange rates by using derivative financial instruments known as forward
contracts to hedge the anticipated cash flows from forecasted foreign
currency denominated revenues. The Company enters into forward contracts
that mature one month prior to the anticipated timing of the forecasted
foreign currency denominated revenues. These contracts are designated as
cash flow hedges intended to lock in the expected cash flows of forecasted
foreign currency denominated revenues at the available spot rate. Actual
spot rate gains and losses on these contracts are recorded in revenues, at
the same time the offsetting gains and losses on the underlying transactions
being hedged are recorded. The fair value of these contracts associated
with the change in forward points is recorded in other income. The Company
also enters into forward contracts that settle within 35 days to hedge
certain intercompany receivables denominated in foreign currencies. These
derivative financial instruments are not used for trading purposes. The
Company's primary foreign currency exposures in relation to the U.S. dollar
are the Japanese Yen and the Euro.
At June 29, 2002, the Company had the following significant foreign
exchange contracts to hedge the anticipated cash flows from forecasted
foreign currency denominated revenues outstanding:
Hedged (BUY) / SELL Weighted Spot Weighted Forward
Currency Local Currency Contract Rate Contract Rate Fair Value Maturity
-------- -------------- ------------- ---------------- ---------- --------
Euro 7,600,000 $0.890 $0.885 (769,426) Jul-Sept 2002
Euro 8,250,000 $0.879 $0.871 (903,235) Oct-Dec 2002
Euro 8,450,000 $0.880 $0.870 (892,796) Jan-Mar 2003
Euro 5,850,000 $0.900 $0.890 (482,947) Apr-Jun 2003
Japanese Yen 1,850,000,000 122.3 per US$ 118.7 per US$ 14,709 Jul-Sept 2002
Japanese Yen 1,825,000,000 125.6 per US$ 123.0 per US$ (578,600) Oct-Dec 2002
Japanese Yen 1,850,000,000 131.8 per US$ 128.8 per US$ (1,319,101) Jan-Mar 2003
Japanese Yen 1,200,000,000 128.6 per US$ 125.2 per US$ (639,889) Apr-Jun 2003
----------
Total: (5,571,285)
==========
The Company estimated the change in the fair value of all forward
contracts assuming both a 10% strengthening and weakening of the U.S. dollar
relative to all other major currencies. In the event of a 10% strengthening
of the U.S. dollar, the change in fair value of all forward contracts would
result in a $10.4 million increase in the fair value of the forward
contracts; whereas a 10% weakening of the U.S. dollar would result in a
$11.8 million decrease in the fair value of the forward contracts.
19
Interest Rate Risk
All of the Company's long-term debt is at fixed rates. Accordingly, a
change in interest rates has an insignificant effect on the Company's
interest expense amounts. The fair value of the Company's long-term debt,
however, would change in response to interest rates movements due to its
fixed rate nature. At June 29, 2002, the fair value of the Company's long-
term debt was approximately $3.0 million higher than the value of the debt
reflected on the Company's financial statements. This higher fair market is
entirely related to the Company's $28.6 million, 7.05% fixed rate senior
notes and the $9.1 million, 8.41% fixed rate mortgage.
Using scenario analysis, the Company changed the interest rate on all
long-term maturities by 10% from the rate levels, which existed at June 29,
2002. The effect was a change in the fair value of the Company's long-term
debt, of approximately $0.7 million.
20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Employment Agreement between the Company and James L.
Peterson.
10.2 Employment Agreement between the Company and Ronald J.
Ryan.
10.3 Employment Agreement between the Company and Stephen C.
Swenson.
10.4 Employment Agreement between the Company and Timothy
Surgenor.
10.5 Employment Agreement between the Company and Thomas D.
Headley.
(b) Reports on Form 8-K
Registrant filed a Report on Form 8-K dated June 18, 2002
reporting a change in the Company's certifying accountant.
21
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. Pursuant to Section 1350 of Chapter
63 of Title 18, United States Code, the undersigned hereby certify that this
report fully complies with the requirements of Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 and that information contained in this
report fairly presents, in all material respects, the financial condition
and results of operations of the Registrant for the periods presented.
HAEMONETICS CORPORATION
Date: August 7, 2002 By: s/James L. Peterson
--------------------------------
James L. Peterson, President
and Chief Executive Officer
Date: August 7, 2002 By: s/Ronald J. Ryan
--------------------------------
Ronald J. Ryan, Senior Vice
President and Chief Financial
Officer
22
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT, AS AMENDED
This Executive Employment Agreement (the "Agreement") is entered into
effective as of January 30, 1998 (the "Effective Date"), amended as of
October 26, 2001, between James L. Peterson (the "Executive") residing at
20 Rowes Wharf #409 Boston, MA 02110, and Haemonetics Corporation (the
"Company"), a Delaware corporation with its principal executive offices at
400 Wood Road, Braintree, Massachusetts 02184-9114.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1. Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity
to serve as President and Chief Executive Officer of the Company and to
perform such specific duties as may reasonably be assigned to Executive
from time to time by the Company's Board of Directors for the period
commencing on the Effective Date and continuing until terminated as herein
provided. Executive hereby accepts such employment for the term hereof.
1.2. Full-Time Commitment. During the period of Executive's
employment with the Company, Executive will, unless prevented by ill
health, devote his whole attention and business time to the performance of
his duties hereunder for the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, the Company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1. Base Salary. The Company shall pay to Executive a base salary
at the rate of Three Hundred Sixty Six Thousand Dollars ($366,000) per
annum until May 1, 1998 and at the rate of Four Hundred Thousand Dollars
($400,000) per annum commencing May 1, 1998, prorated and payable in
substantially equal monthly installments.
2.2. Fringe Benefits. During the term of Executive's employment
hereunder the Company shall provide Executive with such benefits as are
generally made available by the Company to its other full time executive
employees, including reasonable travel expenses incurred while engaged in
Company business. Without limiting the foregoing, the Company shall provide
the Executive with such benefits as are generally made available by the
Company to its other full time executive employees under its expatriate
policy, with Executive's residence being in the United States and
Switzerland being Executive's reference point.
It is specifically acknowledged that the provisions for Tax
Reimbursement under the Company's Temporary International Assignment
Policy, a copy of which is attached hereto as Exhibit A, shall apply to
incentive bonuses paid to the Executive as well as to the other items of
compensation set forth in such policy. It is further acknowledged that the
limitations set forth in Paragraph 3 of Section C of the Temporary
International Assignment Policy (i) shall not apply to tax reimbursement
payments made in connection with taxable income realized by virtue of the
exercise of Haemonetics stock options exercised while the Executive is an
employee of the Company, and (ii) shall apply to tax reimbursement payments
made in connection with capital gain realized by virtue of the sale, while
the Executive is an employee of the Company, of stock acquired upon
exercise of Haemonetics stock options
(capital gain realized upon the sale of stock acquired upon the exercise of
Haemonetics Stock Options being deemed "outside income" under such policy).
2.4. Participation in Share Option Plan. Executive shall be entitled
to participate in the Company's Non-Qualified Stock Option Plan (the
"Plan"). Pursuant to the Plan, Executive has received, concurrently
herewith, an option to acquire Three Hundred Thousand (300,000) shares of
Common Stock in the Company
ARTICLE 3. TERMINATION
3.1. Term. Unless earlier terminated as herein provided, Executive's
employment shall commence on the Effective Date and continue for an initial
period ending on January 30, 2000. Executive's employment with the Company
shall automatically be renewed on a year-to-year basis unless either party
notifies the other party otherwise at least ninety (90) days prior to the
termination of the initial term or of any renewal term.
3.2. Termination for Cause - by the Company. The Company may
terminate Executive's employment for "Cause" upon the occurrence of any of
the following events:
(i) Executive shall have willfully failed or continued to
fail substantially to perform his duties hereunder (other than any
failure resulting from Executive's incapacity due to physical or
mental illness) for 30 days after a written demand for performance is
delivered to Executive on behalf of the Company which specifically
identifies the manner in which it is alleged that Executive has not
substantially performed his duties; provided that the Company's
economic performance or failure to meet any specific projection shall
not, in and of itself, constitute "Cause."
(ii) Executive shall have engaged in (A) any misappropriation
of funds, properties or assets of the Company, (B) any malicious
damage or destruction of any property or
assets of the Company, whether resulting from Executive's willful
actions or omissions or negligence, or (C) any falsification of any
books, records, documents or systems of the Company.
(iii) Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony, or (B) commit or
knowingly allow to be committed any illegal action on any premises
of, or involving any property or assets of, the Company.
3.3. Termination For Cause - by Executive. Executive may terminate
his employment with the Company for "Cause" upon the occurrence of any of
the following events:
(i) the Company shall breach any of the material provisions
of this Agreement and such breach shall remain uncured by or on
behalf of the Company within thirty (30) days following its receipt
of notice from Executive which specifically identifies the manner in
which it is alleged that Company be committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5.4;
(iii) a materially adverse change in the responsibilities
assigned to Executive by the Company or in the compensation and
benefits paid by Company to the Executive shall have occurred such
material adverse change shall remain uncured by or on behalf of the
Company within thirty (30) days following its receipt of notice from
Executive specifically identifying such material adverse change; or
(iv) a materially adverse change in Executive's title shall
have occurred. Executive's right to terminate his employment pursuant
to this section shall not be affected by his incapacity due to
physical or mental illness. Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting a Cause for termination by the Executive or
the Company.
3.4. Change in Control. In the event of a "Change in Control" (as
defined below), either the Company or the Executive may elect to terminate
the Executive's employment. Regardless of whether or not his employment
terminates, in the event of a Change in Control the Executive shall be
entitled to the lump sum payment set forth in Section 4.1.2 below. For
purposes of this Agreement, a "Change in Control" shall mean a change in
control of the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1"4, as amended (the "Exchange Act"),
whether or not the Company is, in fact, required to comply therewith;
provided that, without limitation, such a change in control for purposes of
this Agreement shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner"(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which
no
"person" (as herein above defined) acquires 50% or more of the
combined voting power of the Company's then outstanding securities;
or
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
3.5. Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6. Disability. In the event of the Disability of Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a
period of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and
Executive (or such representative) are unable to agree on an independent
qualified physician, as determined by a panel of three physicians, one
designated by the Company, one designated by Executive (or his personal
representative) and one designated by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS; CHANGE IN CONTROL
4.1.1 Termination Events Resulting in Severance Payments. In the
event of the termination
(i) by the Company without "Cause", or
(ii) under Section 3.3,
of the Executive's employment under circumstances not involving a
Change in Control, the Company shall:
(a) pay Executive, as a severance payment, an amount equal to
Executive's annual base salary as set forth in Section 2.1, such
payment to be made in twelve (12) equal monthly payments during the
period commencing on the date such termination occurs (the
"Termination Date") and ending one (1) year thereafter (the
"Severance Period"),
(b) provide to Executive during the Severance Period, at the
Company 's expense, such benefits as are in effect and applicable to
Executive as of the Termination Date, except to the extent expressly
prohibited by the terms of such benefits,
(c) if by operation of law or under the terms of the relevant
plan, program or policy, Executive is not eligible to receive any of
the benefits described in clause (b) above during the Severance
Period, provide to Executive at the Company's expense substantially
equivalent benefits or, at the Executive's election, the cash value
of equivalent benefits; and
(d) furnish Executive, during the Severance Period, with
office space, secretarial assistance and such other facilities and
services at least of the level and nature as were provided by the
Company prior to the Termination Date.
4.1.2 Change in Control. In the event that a Change in Control occurs
while the Executive is in the employ of the Company:
(i) The Company shall pay to the Executive immediately
following such Change in Control a lump sum payment, in an amount
equal to 2.99 times the amount which is the average of the base
salary plus incentive bonus paid to the Executive in each of the five
calendar years preceding the calendar year in which the Change in
Control occurs.
(ii) If either the Company or Executive shall terminate the
Executive's employment within one year following such Change in
Control, the Executive shall not be entitled to any severance
payments related to base salary, but the
Company shall provide to the Executive, at the Company's expense,
during the Severance Period (which shall be the one-year period
commencing on the date such termination occurs):
(a) such benefits as are in effect and applicable to
Executive as of the date of such Change in Control, except to
the extent expressly prohibited by the terms of such benefits,
(b) if by operation of law or under the terms of the
relevant plan, program or policy, Executive is not eligible to
receive any of the benefits described in the foregoing clause
(a) during the Severance Period, substantially equivalent
benefits or, at Executive's election, the cash value of
equivalent benefits, and
(c) office space, secretarial assistance and such other
facilities and services at least of the level and nature as
were provided by the Company prior to the Change in Control.
provided, however, that in the case of all payments and benefits under this
Section 4.1.2 (x) no amount of gross up shall be paid on account of any
taxes and (y) no tax reimbursement payments under the Company's Temporary
International Assignment Policy shall be made with respect to any payments
or benefits received by the Executive on account of a Change in Control,
including without limitation the payments and benefits set forth in this
Section 4.1.2; and provided further that in no event shall the total of all
payments and benefits to the Executive, under this Agreement or otherwise,
that are contingent (within the meaning of the proposed regulations
promulgated under Section 280G of the Internal Revenue Code (the "Code"))
on a Change in Control, including without limitation the payments and
benefits set forth in this Section 4.1.2,
exceed 2.99 times the "base amount" described in Section 280G(b)(3) of the
Internal Revenue Code (the "Maximum Amount").
If the total of such payments and benefits to the Executive would
exceed the Maximum Amount then the payments and benefits to the Executive
shall be reduced to the Maximum Amount. The determination of the Maximum
Amount and the amount of such reduction shall be made by the accounting
firm of the Company or the Company's successor and such determination shall
be final and binding on all parties. The Company or its successor will then
determine what payments and benefits, from whatever source, will be reduced
based on the accounting firm's analysis.
4.1.3 Tax Reimbursement. Notwithstanding any other provisions of this
Agreement, no tax reimbursement payments under the Company's Temporary
International Assignment Policy shall be made with respect to any income
realized (within the meaning of the statutes and regulations of the
applicable taxing authority) by the Executive after termination of
employment. In the event that the Executive returns to his home abroad
immediately following a termination of employment to which Section 4.1.1.
applies, the provisions for tax reimbursement under the Company's Temporary
International Assignment Policy shall be applied to the payments and
benefits set forth under Section 4.1.1 above if taxes are levied in the
United States on such payments and benefits. If the Executive does not
return to his home abroad immediately following a termination of employment
to which Section 4.1 .1 applies, the provisions for tax reimbursement under
the Company's Temporary International Assignment Policy shall not apply to
the payments and benefits set forth under Section 4.1.1 above.
4.1.4 Other Termination. In the event that the Employee dies or
retires or this agreement expires not having been renewed, the Executive
shall not be entitled to any severance pay, nor to
any benefits for any period following termination of employment except for
such COBRA benefits as may be required by law.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1. For the purposes of this Article 5, the following shall have
the designated meanings.
5.1.1. Proprietary Information: Information of value to the
Company and not generally available to the public of whatever kind or
nature disclosed to the Executive or known by the Executive (whether
or not invented, discovered or developed by the Executive) as a
consequence of or through the Executive's employment with the
Company. Proprietary Information shall include information relating
to the design, manufacture, application, know-how, research and
development relating to the Company's products, sources of supply and
material, operating and other cost data, lists of present, past, or
prospective customers, customer proposals, price lists and data
relating to pricing of the Company's products or services, and shall
specifically include all information contained in manuals, memoranda,
formulae, plans, drawings and designs, specifications, supply
sources, and records of the Company legended or otherwise identified
by the Company as Proprietary Information, whether learned by the
Executive prior to or after the date hereof.
5.1.2. Concepts and Ideas: Those concepts and ideas known to
the Executive relating to the Company's present and prospective
activities and products.
5.1.3. Inventions: Discoveries and developments, whether or
not patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2. All Inventions which are at any time "made" i.e., conceived or
reduced to practice by the Executive, acting alone or in conjunction with
others, during or in connection with the
Executive's employment (or, if based on or related to Proprietary
Information, "made" by the Executive within twelve (12) months after the
termination of such employment) and all Concepts and Ideas held by the
Executive shall be the property of the Company, free of any reserved or
other rights of any kind on the Executive's part in respect thereof.
5.3. The Executive will promptly make full disclosure to the Company
in writing to the Manager of Engineering or the Manager of Research &
Development of any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's cost and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the Company of all
right and title to such Inventions and Concepts and Ideas, without, during
the term of this Agreement, further compensation. The absence of a request
by the Company for information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to constitute a
waiver of the Company's rights under this Agreement.
5.4. Except as required by the Executive's duties hereunder, the
Executive will not, directly or indirectly, use, publish, disseminate, or
otherwise disclose any Proprietary Information, Concepts and Ideas or
Inventions without the prior written consent of the Company.
5.5. All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services, records, notebooks and similar repositories of or containing
Proprietary Information and Inventions, including all copies thereof, that
come into the Executive's possession or control by reasons of the
Executive's employment, whether prepared by the Executive or others, are
the
property of the Company, will not be used by the Executive in any way
adverse to the Company, will not be removed from the Company's premises
except as the Executive's normal duties require and, at the termination of
the Executive's employment with the Company, will be left with or forthwith
returned by the Executive to the Company.
5.6. During the time the Executive is an employee of the Company and
for a period of one (1) year thereafter, the Executive will not engage in
any activity, on his own behalf or on behalf of any competitor of the
Company, which is in the field of blood processing and involves activities
similar to those performed at the Company, nor will the Executive endeavor
to entice away from the Company any employee whether on the Executive's
behalf or on the behalf of another while the Executive is an employee and
for a period of one (1) year thereafter.
ARTICLE 6. MISCELLANEOUS
6.1. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2. Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs,
successors and assigns. If Executive should die while any amount due to him
at such time remains unpaid, such amount, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his
devisee, legatee or other designee or, if there is no such designee, to his
estate.
6.3. Assignment. Except as otherwise provided in Section 5.4.,
neither this Agreement nor any rights or obligations hereunder shall be
assignable by either party hereto without the prior written consent of the
other party.
6.4. Obligation of the Company's Successors. Any successor to the
business of the
Company, whether directly or indirectly by merger, consolidation,
recapitalization, combination, purchase of stock, purchase of assets or
otherwise, shall succeed to the rights and obligations of the Company
hereunder. The Company will require any such successor to expressly assume
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place.
6.5. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three arbitrators in the Commonwealth of
Massachusetts in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
6.6. Notices. All notices, requests, demands and other
communications to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given if delivered by hand or mailed
by registered or certified mail, return receipt requested, postage prepaid,
as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184-9114
Attention: [ ]
If to Executive, to:
James L. Peterson
20 Rowes Wharf #409
Boston, MA 02110
or such other address as either party hereto shall have designated by
notice in writing to the other party.
6.7. Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
6.8. Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
6.9. Severability. In case any provision hereof shall, for any
reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or enforceable
provision had not been included herein. If any provision hereof shall, for
any reason, be held by a court to be excessively broad as to duration,
geographical scope, activity or subject matter, it shall be construed by
limiting and reducing it to make ii enforceable to the extent compatible
with applicable law then in effect.
6.10. Withholding. Any payments provided for hereunder shall be paid
after deducting any applicable withholding required under federal, state or
local law.
6.11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes the provisions of all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any
party hereto with respect
to the subject matter hereof. A certain Patent, Trade Secrets and
Confidential Information Agreement between the Company and the Executive
dated October 1, 1979 is hereby terminated and cancelled in its entirety.
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth ins this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the date first above written.
s/ James L. Peterson
______________________________
JAMES L. PETERSON
HAEMONETICS CORPORATION
By: s/ Stuart Burgess
__________________________
Name: Stuart Burgess
Title: Chairman
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
APPROVED:_________________________ REVISED:_________________________
POLICY
- ------
It is the policy of Haemonetics to encourage employees to accept
international assignments for career development, or to satisfy business
needs of the Host Country organization. Haemonetics will provide assistance
to the employee and his/her family as required and appropriate to
facilitate transition to a different country, culture and business
organization. Haemonetics' policy is designed to maintain an employees
living standard, avoiding both a material financial windfall or
disadvantage to the employee.
It is Haemonetics' policy to return an employee who completes a Temporary
International Assignment to a position of at least comparable
responsibility, compensation and status to the position held immediately
prior to the assignment, provided the employee is not the object of
significant disciplinary or job performance measures
PROCEDURE
- ---------
1. APPLICATION OF POLICY
A. The provisions of this policy will be applied consistently and
equitably to all employees who accept a Temporary International Assignment
to any international location.
B. Hiring Managers or Personnel Departments will not alter these
provisions in any of the following ways, except with the prior written
approval of the President:
- reduce the level of benefits stated in the Policy and/or Procedures,
- deny any provisions to which the employee is entitled,
- increase the level of benefits stated in the Policy and/or Procedures,
- offer a provision which is not stated in the Policy
C. The provisions of the policy are non-negotiable; additionally, an
employee may neither receive reimbursement in lieu of a specified benefit
not used or only partially used nor way a specified benefit be traded for
one not included in the policy.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
2. GENERAL
A. Temporary International Assignments are normally for a period of two-
three years. Employees are expected to return to their Home Country at the
completion of the Temporary International Assignment.
B. Employees that accept an offer of Temporary International Assignment
will remain employees of their Home country, although their compensation,
allowances, and any other approved business expenses will be paid by the
Host Country.
C. The Home Method of Compensation is defined as compensation, including
the amount and timing of base salary, bonus plans, and salary increases
determined and administered in accordance with the policies and practices
of the Home Country. All adjustments, including housing and cost of living,
will be calculated from this compensation amount. The Host Method of
Compensation is defined as compensation, including the amount and timing of
base salary, bonus plans, and salary increases, determined and administered
in accordance with the policies and practices of the Host Country.
D. Temporary Assignments to the United States or Switzerland will
administer compensation based on the Host Method of Compensation. All other
international assignments will be administered based on the Home Method of
Compensation.
E. The net compensation of the employee on a Home Country salary program
(inclusive of allowances) will not be less than a comparable net Host
Country base salary.
F. A Letter of Temporary International Assignment detailing the salary,
allowances and any local provisions will be prepared for all employees
accepting an international assignment.
The Letter of Temporary International Assignment will normally be generated
by the Host Country Manager.
3. APPROVAL PROCESS
In order for an International Assignment to take place, appropriate
approvals must be obtained prior to the initiation of any relocation
activity, including that of the Vice Presidents of the employee's current
organization and proposed organization, and of the President.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
4. SELECTION FOR ASSIGNMENT
Incoming Organization
The formal job offer to an employee being considered for a Temporary
International Assignment can be made only after all approvals have been
obtained including that of The hiring manager, the Vice Presidents of the
employee's current organization and proposed organization, the General
Counsel (if the assignment is to or from the United States) and of the
President.
Prior to the formal job offer, the hiring manager shall:
1. coordinate the compensation and relocation details with the
appropriate personnel in the Staffing Departments of the Home and Host
locations, the significant terms of which must be reflected in the offer
letter and/or relocation agreement,
2. assure that the tax laws pertinent to the assignment duration
have been defined through a tax consultant with whom Haemonetics has an
agreement.
3. insure that the employee and family have received an
international relocation orientation to develop realistic expectations
about living at the location of assignment.
5. EMPLOYEE RESPONSIBILITIES
A. Each employee is expected to base the decision regarding acceptance
of an offered international assignment on the total opportunities.
B. To assist in the decision making process, Haemonetics will provide
employees with an orientation designed to promote realistic expectations
about the prospective international location and job opportunity.
C. Honesty and personal responsibility are the foundation of
Haemonetics' operating principles. Each employee of Haemonetics that
accepts an international assignment represents the Corporation and is
expected to conform to these principles.
D. Among the specifics, Haemonetics expects that employees on
international assignment will:
- comply with local laws,
- comply with all regulations regarding visa, work and residency
permits,
- transfer funds or currency in strict accordance with the
requirements of any country,
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
- file timely personal tax returns which accurately reflect the
frill and proper amount of tax liability to the employee's Home
Country and/or the country of assignment,
- declare material imported into any country honestly and correctly.
6. HOME COUNTRY CAREER MANAGER RESPONSIBILITIES
Each employee who accepts a Temporary International Assignment will have a
designated Home Country Career Manager. This Manager should be a Vice
President or a direct report of a Vice President in the employee's Home
Country organization, as selected by the employee with the consent of the
Manager selected. The Career Manager will have the following
responsibilities:
1. Meet with the employee prior to the employee's actual transfer
to discuss the assignment and future plans, including the repatriation plan
and act as a career mentor to provide on-going support to the assignee
throughout the assignment and assist in identifying a position for the
assignee's return.
2. Assure that there is continuing Home Country organizational
commitment to the employee during and at the time of the employee's return
from the international assignment.
3. Assure that a Repatriation Plan is completed and maintained in
the Home Country organization. The Repatriation Plan must include:
A. Potential positions for the assignee at the conclusion of
the assignment, and
B. Activities intended to ensure the transfer of learnings,
both professional and cultural, from the assignee to the returning
organization.
4. Assure that the Host Country organization administers scheduled
employee salary plans/reviews based on the provisions of the Home Country
Salary Program.
5. Assure that there are regular meetings and communications with
the employee during business trips and/or home leaves while the employee is
internationally assigned.
6. Assure that there are opportunities for technical training as
required to maintain the employee's skills.
7. Notify the employee if the Career Manager is unable to continue
in the designated role, AND assist in identifying a new Career Manager.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
8. Initiate communications with the employee, at a minimum, nine
(9) months prior to the empoyee's scheduled return. These communications
should include:
A. Information pertaining to the positions which are being
considered for the employee upon his/her return to the Home Country.
B. Activities which are being planned to facilitate the
learning transfer from the assignee to the returning organization.
9. Communicate to the Host Country Vice President and employee the
final details of a job offer (with required approvals, stated above); This
communication should be completed within three (3) to six (6) months of the
assignee's scheduled date of return.
7. IMMIGRATION
Most countries require a work permit and/or visa for non-citizens to enter
or be employed in the country. The Host Country (or organization with
operational control, if different, with assistance of the Host Country)
shall be responsible for securing all arrangements for the legal
immigration of the employee and employee's family. The international
relocation of an employee will take place only when the employee has
received the necessary approval and documentation from the government at
the Host location.
8. BENEFITS
A. Where legal, administratively feasible and practical, Haemonetics
will retain the employee in the Home Country benefit programs under:
- Life Insurance
- Disability
- Social Security
- Savings Plus [or other retirement vehicle]
If not feasible for legal or financial reasons, Haemonetics will provide
the employee with comparable benefits at the Host location.
It is expected that the employee will participate in the Host Country
medical plan on the same terms and conditions as other employees at the
Host Country. An employee who participates in the Host Country medical plan
may choose to also participate on their Home Country medical plan, if
legally permitted, provided the employee continues to pay the full
applicable premium for the Home Country plan, if any.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
B. Service Recognition Awards
Employees will participate in the Service Recognition Program in effect at
the assignment location, unless the assignment location has no program. In
that case, the employee will continue to be eligible to participate in the
Home Country program.
C. Employee Stock Purchase Plan (ESPP)
Employees will be eligible to participate in the Employee Stock Purchase
Plan of the Host Country, where service requirements include any service
performed at the Home Country.
D. Vacations and Holidays
1. The employees on Temporary International Assignment will
participate in the vacation accrual and holiday schedules in effect at the
Host Country.
2. Employee's vacation days which have been accrued prior to the
international assignment will be transferred with the employee upon
international assignment. up to the maximum accrual amount of vacation days
allowed in the Host Country. Any balance between the total accrued vacation
the employee has earned prior to the assignment, and the amount to be
transferred will be frozen in the Home Country, and may be used by the
employee at the termination of the international assignment after return to
the Home Country. At the termination of the international assignment, the
employee may transfer vacation hours accrued while on assignment in
accordance with the Host Country schedule, only to the extent that the
total accrual to be transferred plus the balance remaining in the Home
Country does not exceed the maximum allowable accrual for the employee in
the Home Country.
3. Employees are encouraged to take all earned vacation each year
while on Temporary International Assignment.
4. Upon return from assignment, any unused vacation time while on
international assignment up to the maximum accrual amount of vacation days
allowed in the Home Country, will be transferred with the employee back to
the Home Country. In no event shall the total of the number of vacation
hours "frozen" at the commencement of the international assignment plus the
number of unused vacation hours transferred back to the Home Country with
the employee who has completed an international assignment exceed the
maximum vacation accrual allowed by the Home Country.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
9. RELOCATION PROVISIONS
A. Familiarization Visit
1. Prior to a formal offer being made a Familiarization Visit for
the anticipated final candidate to the proposed location is required.
Coordination for this trip is the responsibility of the Incoming Manager.
2. Haemonetics will reimburse expenses for round trip air or
ground transportation, lodging, meals and a rental car, including gas, for
the employee and accompanying spouse for up to five (5) days, excluding
travel time, in accordance with Haemonetics' expense account policy. These
days will be taken as Company time for the employee, and also for the
spouse if the spouse is a Haemonetics employee.
3. If the Familiarization Visit is combined with the house hunting
trip, Haemonetics will reimburse expenses as detailed in the previous
paragraph for a total often (10) days, excluding travel time.
4. The employee and accompanying spouse using international air
travel are entitled to Business Class consistent with the guidelines in the
Corporate Travel Policy.
Reimbursement will also be provided for overnight lodging, meals and
necessary en-route expenses for one night if air travel time exceeds nine
(9) hours.
5. Employees traveling by personal automobile will be reimbursed
for mileage at the Company rate prevailing at the Host location.
6. Employees are discouraged from having children accompany them
and their spouse on the Familiarization Visit. Approval for accompanying
children will be granted by the Manager who is paying for the relocation
expenses on an exception basis only, for special circumstances.
7. If children do not accompany the parents on the Familiarization
Visit, reimbursement will be provided for expenses associated with
providing child care in the Home location during the Familiarization Visit.
B. Physicals
1. Employees and accompanying spouse and children are encouraged
to have a physical provided by the medical plan in effect at the Home
Country location to assist in the decision making process.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
2. If the medical plan in the Home location provides no
reimbursement or only partial reimbursement for a physical, the Company
will reimburse for the portion of the cost of a normal, routine physical
that is not covered by the medical plan.
C. House Hunting Visit
1. The employee and spouse will receive a separate House Hunting
Visit in addition to the Familiarization Visit. The Manager at the location
of assignment will coordinate this visit.
2. Haemonetics will reimburse expenses for round trip air travel
or ground transportation, meals, lodging, and a rental car, including gas,
for the employee and accompanying spouse for up to five (5) days, excluding
travel time, in accordance with Haemonetics' expense account policy. These
days will be taken as Company time for the employee and also for the
spouse, if the spouse is a Haemonetics employee.
3. The employee and accompanying spouse using international air
travel are entitled to Business Class consistent with the guidelines in the
Corporate Travel Policy.
Reimbursement will also be provided for overnight lodging, meals and
necessary en-route expenses for one night if air travel time exceeds nine
(9) hours.
4. Employees traveling by personal automobile will be reimbursed
for mileage at the Company rate prevailing at the Host Location.
5. Children are not eligible to accompany parents on the House
Hunting Trip.
6. Reimbursement will be provided for expenses associated with
providing child care for the children in the Home location during the House
Hunting Trip.
D. Shipment of Household Goods and Personal Effects
1. Haemonetics will pay the normal and reasonable costs of moving
the employee's personal effects to the international location. Payment for
the shipment of household goods will be made only in circumstances where
furnished accommodations are not available.
2. Items such as boats, heavy equipment, pianos, art objects,
collectibles etc. requiring special handling will not be moved at Company
expense.
3. Haemonetics will not reimburse duty expenses for luxury items,
liquor and wine, perfumes or newly purchased items related to moving
household goods or personal effects of the employee.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
4. Employees (whether single or married) going on Temporary
International Assignment are eligible to ship up to 1,000 pounds (450
kilograms) of household goods/personal effects by air; any remaining
household goods/personal effects will be shipped by surface shipment.
Management paying for the relocation may elect to ship all of the household
goods by air when this is the most cost effective method for the Company.
5. Storage of Goods
A. Storage of goods not shipped by the employee, including
transportation to and from storage, is paid by the Company for the
duration of the Temporary International Assignment
B. Temporary Storage of goods during the move is also
reimbursed by the Company when necessary.
6. Appliances
Haemonetics will not ship heavy appliances (such as stove,
refrigerator, clothes washer, clothes dryer, and television), unless
it is more cost effective for the Company. Haemonetics will either
provide these appliances or reimburse employees for the cost of
purchasing these appliances in the Host Country. Reimbursement will
be provided up to a reasonable amount established by Host Country
Personnel with appropriate documentation submitted by employee,
provided these appliances are not included as part of the rental
housing.
7. Household Pets
1. Haemonetics defines household pets as those that normally
reside in the employee's home and will reimburse reasonable costs
associated with the following:
- Health Certification
- Travel and Travel Containers
- Quarantine
- Boarding during Temporary Living, if necessary
2. It will be the employee's responsibility to identify
regulations and requirements necessary for the importation of their
household pets to the international location.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
3. It will also be the employee's responsibility to make all
the necessary travel arrangements for the importation of household
pets.
E. Automobiles
All of the provisions for automobiles (Shipment, Storage, Sale and Lease
Cancellation) apply to one (1) automobile for employees relocating alone
and for up to two (2) automobiles for employees accompanied by family.
1. Shipment of Automobiles
a. Haemonetics will not normally ship automobiles from one country to
another unless it is cost effective for the Company.
b. If automobiles are authorized by the Company to be shipped,
Haemonetics will pay for the shipment of up to two automobiles, including
freight, handling, and insurance, as required, but will not pay shipping
charges in excess of the estimated Loss on Sale and/or Storage casts for
the qualifying vehicle(s).
2. Storage of Automobiles
If an employee elects to store an automobile during an international
assignment, reasonable and ordinary storage costs will be paid for the
duration of the employee's international assignment.
3. Sale of Automobile
a. If an employee sells an automobile and is forced to take a loss on
the sale, Haemonetics will reimburse any loss up to a maximum of 20% of the
Blue Book value of the automobile. The loss is the difference between
retail value and actual selling price.
b. Loss on Sale provisions apply at the Home location at the start of
the assignment and at the foreign location at the end of the assignment.
c. The automobile's retail value is determined by an authorized
automobile valuation service operating in the country where the automobile
is sold. If such a service is unavailable, an authorized automobile dealer
can provide a quote of the automobile's value in writing.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
4. Lease Automobiles
If an employee elects to break a lease on their automobile in the Home
Country at the start of assignment or in the Host Country at the conclusion
of assignment and there are lease-breaking penalties involved,
reimbursement of these costs will be provided up to the Blue Book value of
the leased car.
10. PERSONAL INVESTMENT
Haemonetics does not assume responsibility for losses of funds on personal
investments or losses arising from currency exchange rate fluctuations
affecting Temporary International Assignees' personal investments Personal
investments include purchase and sale of real estate.
A. Sale of Home Prior to Relocation
Employees are eligible for the provisions of the Sale of Home Policy
consistent with the Relocation Policy in their Home Country when accepting
a Temporary International Assignment as long as the sale is completed
within the first year of assignment.
B. Lease Cancellation of Apartment/House Prior to Relocation
If the employee is required to terminate a lease on their primary residence
prior to moving internationally, Haemonetics will reimburse the employee
for charges up to an amount which equals three months rental.
C. Leasing Assistance for Home in the Home Country
Employees may wish to lease their home in their Home Country rather than
sell when accepting a Temporary International Assignment. If so,
reimbursement will be provided for:
- broker's fee, if any, or reasonable cost if no broker's fee is
involved, for securing a tenant.
- legal fees for drawing up a lease agreement.
- a reasonable fee for a management company to manage the property
during the employee's absence.
- the cost of mortgage interest on the first mortgage only, real
estate taxes, homeowner's insurance and reasonable maintenance for
each month that the property is not rented, up to a maximum of
three months per calendar year of assignment.
- the difference between the rental rate and the monthly carrying
costs (mortgage interest, real estate taxes and insurance), to a
reasonable figure.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
- the additional insurance cost of renter's insurance over the
employee's previous homeowner's policy, if any.
11. OTHER REIMBURSEMENTS
A. Language Lessons
Employees and family members relocating to a country whose language they
neither speak nor understand well are eligible to be reimbursed for the
cost of a reasonable amount of language instruction for each relocating
family member. Reimbursement amounts will be determined by Host Country
Manager.
B. Travel to New Location
1. Haemonetics will pay travel expenses for the employee and
accompanying spouse and children. Reasonable en route expenses for meals,
lodging, tips, and other necessary items are reimbursed.
2. Employees and accompanying spouse and children using international
air travel are entitled to Business Class consistent with the guidelines in
the Corporate Travel Policy. Reimbursement will also be provided for
overnight lodging, meals and necessary en-route expenses for one night if
air travel time exceeds nine (9) hours.
3. Employees traveling by personal automobile will be reimbursed for
mileage at the Company rate prevailing at the Host location.
4. Employees who travel by means other than air travel or ground
transportation will be reimbursed only up to the cost of air travel from
the old location to the new location and any additional time taken en route
is considered vacation time.
C. Travel for Children
If the employee has dependent, unmarried children (who are under 19 years
of age unless a fulltime student, and then under 23 years of age) who do
not accompany the employee on the Temporary International Assignment,
Haemonetics will pay for round-trip Economy Class air fares for each child
up to two visits per year to the international location.
This policy provision applies to children who are full time students and/or
to children who are fully dependent on their parents for financial support.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
D. Temporary Living
1. All employees and accompanying family members are permitted up to a
total of thirty (30) days of temporary living in the Home and/or Host
location, if necessary. Any extension due to non-availability of housing,
delays in shipment of household goods, etc., must be approved by the
Manager paying for the employee's relocation.
2. The following items are considered reimbursable for the employee and
accompanying family members during temporary living, if supported by
receipts:
- Lodging - hotel/motel rates approved by the Company for the area,
or furnished apartments
- Auto Rental, excluding gas, (one automobile) - the size of the
automobile should be reasonable for the family size.
- Meals
3. Employees who elect to stay with family or friends during temporary
living will be eligible for reimbursement of auto rental expenses (one
automobile) if supported by receipts, and $25 per day if the employee is
alone or $50 per day if the employee is traveling with his/her family
(regardless of size).
E. Miscellaneous Relocation Reimbursement
1. Upon arrival at the location of assignment, employees will receive a
one-time payment to assist in defraying miscellaneous costs incurred in the
relocation which are not specifically reimbursable under other provisions
of this policy.
This payment will be made in local currency at the location of
international assignment and will be consistent with the amount in effect
at the incoming location on the date the assignee begins the International
Assignment.
2. Two levels of payment will be administered based on the number of
accompanying family members:
- Unaccompanied employees or employees with one family member
- Employees accompanied by two or more family members
3. The amounts of the miscellaneous payment are reviewed by the
Corporation each year and adjusted, as appropriate.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
4. The specific amount for each employee on international assignment
will be stated in the Letter of Assignment
F. Reimbursement for Transferring Funds Internationally
Haemonetics recognizes that employees who are on a Temporary International
Assignment have financial obligations in both the Home and Host Country. In
order to facilitate the transfer of funds from one country to another,
Haemonetics will reimburse employees who are on international assignment
for the bank/wire transfer charges involved in making monetary transfers
from one country to another for one such transfer per month.
G. Reimbursement for Mail Forwarding Services
At the employee's election, the Home Country business address will be the
forwarding address for all personal mail and the Home Country will take
responsibility for forwarding it to the employee in the Host Country, or
the employee will be reimbursed for reasonable and ordinary expenses
associated with a formal mail forwarding service to the Host Country.
H. Housing Allowance at the Host Location
Employees on Temporary International Assignment are expected to reside in
rental properties. A Housing Allowance will be paid to employees at
locations where the cost of rental housing requires a larger percentage of
the employee's income than the average percentage spent on housing in the
Home Country. This average cost represents the employee's Housing
Contribution and will be calculated according to Home Country norms
provided by a third-party consultant.
Haemonetics will pay the difference between this norm and a reasonable rent
at the location of assignment. Reasonable rent figures are determined and
maintained by Host personnel and are to be communicated to the employee
during the Familiarization Visit or House hunting Trip.
I. Purchase/Sale of Home (Host Country)
1. Employees on Temporary International Assignment are not encouraged to
purchase a home at the international location. Haemonetics will NOT provide
any assistance with the purchase/sale of a home at the Host location.
2. Employees who purchase a home at the Host location will NOT receive
any Housing Allowance.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
J. Cost of Living Allowance
1. A cost of Living Allowance will be paid to employees at international
locations using the Home Compensation Method where the costs of normally
purchased goods and services exceed those which the employee would be
expected to pay in the Home Country. This allowance will begin when the
employee moves out of temporary living.
2. Cost of Living Allowances are determined by a third-party consultant
and will vary based on family size, salary, exchange rates, and cost of
living surveys.
K. Educational Reimbursement
1. Certain costs for private schooling are paid for children of
employees on international assignment when the public schooling available
at the international location is incompatible (due to language or
curriculum or culture) with public schooling provided in the Home Country.
2. The general standard used to determine curriculum adequacy is that a
child who completes a grade in an international school must be able to
enter the next higher grade in the Home Country school.
3. Actual and reasonable costs for registration, tuition, books and
transportation are reimbursed. All other costs associated with private
schooling including, but not limited to, athletic fees, lab fees, music
fees, extra curricular activities, etc. are not reimbursed.
4. If the decision is made to send a child to school outside the country
of assignment and private schooling is available at the location of
assignment, the reimbursement will not exceed the amount which would have
been payable at the location of assignment.
If the decision is made to send a child to school away from the location of
assignment by reason of private schooling not being available at the
location of assignment, reimbursement will be provided for room, board,
registration, tuition, books and up to two round trips per year to the
family's location of assignment
5. Reimbursement of these expenses is limited to elementary (including
kindergarten) and secondary school children who normally and customarily
attend public schools in their Home Country and/or who meet the minimum age
for public education at the location of assignment.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
12. LEAVES
A. Home Leave
1. Haemonetics grants home leave to each employee who is on Temporary
International Assignment.
2. One (1) home leave is granted for each twelve (12) months of
international assignment completed. In unusual situations, or to coincide
with holiday periods in the Home Country, the Host Manager may authorize
the first home leave after the employee has completed less than twelve
months at the international location.
3. There are two purposes for the home leave.
a. For the employee to maintain communication with the Home
Country Career Manager and conduct any other business that is necessary.
The employee is required to meet with his/her Career Manager during home
leave to discuss the international assignment and the employee's future
return to the Home Country.
b. For the employee and family to maintain their identity with the
Home Country.
4. Employees and accompanying spouse and children using international
air travel are entitled to travel International Business Class consistent
with the guidelines in the Corporate Travel Policy. Reimbursement will also
be provided for overnight lodging, meals and necessary en-route expenses
for one night if air travel exceeds nine (9) hours.
5. Haemonetics encourages employees and family members to stay with
relatives or friends when possible during home leave. Employees staying
with friends or relatives will be reimbursed for a rental car, including
gas, for five (5) days and will receive $25 per day if traveling alone and
$50 per day if traveling with a family (regardless of size).
When it is not possible for employees to stay with relatives or friends, a
total often (10) days in the home work location will be reimbursed for the
employee and accompanying family members for reasonable lodging expenses as
well as a reimbursement for a rental car, including gas, and meals.
6. If the Home Country Career Manager works in a different location from
where the employee worked immediately prior to assignment, the employee
(not the family) will be reimbursed for air fare to return to the location
of the Home Country Career Manager.
7. If the family wants to return to a place in the Home Country other
than where the employee worked immediately prior to the assignment they may
do so, but travel costs will be reimbursed only up to the air fare amount
for return to the home work location.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
8. If an employee elects alternative means of transportation or non-
direct routing, Haemonetics will reimburse reasonable and actual expenses
not to exceed the cost of direct air fare between the location of
assignment and the home work location.
9. Home leave will be taken as vacation time for the employee, excluding
travel time and days spent by the employee conducting Haemonetics business
and meeting with the Home Country Career Manager.
B. Emergency Leave
1. Emergency Leave will be granted to the employee and/or spouse for
five days of company time, excluding travel time, in cases of serious
illness of the following:
- parent/stepparent
- child/stepchild living in the Home Country
- employee's spouse
2. This leave will also be granted in cases of death of the employee's
or spouse's:
- parent/stepparent - employee's spouse - sister/stepsister
- child/stepchild - brother/stepbrother - grandparents
3. Haemonetics will reimburse reasonable and customary expenses for
round trip air travel or ground transportation, lodging, a rental car,
including gas, and meals if the employee and accompanying family members
need to stay in a hotel during the Emergency Leave.
4. If children do not accompany the parents on the Emergency Leave,
reimbursement will be provided for expenses associated with child care at
the location of assignment.
C. Death in the Foreign Location
1. In the event of death of an employee while on international
assignment, or of a dependent, at the foreign location, Haemonetics will
pay the expenses in the Host Country associated with returning home for
burial/cremation, whichever the employee or spouse wishes, provided local
laws permit.
2. If the remains are to be returned to the Home Country or to another
location designated by the family, the Company will assume the costs of
shipment, the required documentation and transportation by regular sea or
air service to an undertaking establishment designated by the family.
3. In the case of the employee's death, the family will be relocated to
the Home Country under the repatriation plan of the International
Relocation Policy.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
13. TAXES
A. Haemonetics has an agreement with an international tax consulting
firm to provide specified tax services to internationally assigned
employees.
B. Haemonetics will pay for the costs of these specified services if
provided by the international tax consulting firm with whom Haemonetics has
an agreement.
A. Tax Orientation
Employees who are transferring internationally are eligible for, and must
receive, a tax orientation prior to the start of the assignment in their
Home Country and at the Host location to ensure that they are aware of
their tax responsibilities in both locations.
B. Tax Preparation
Employees on a Temporary International Assignment are eligible to have
income tax forms for both the Home and Host locations prepared annually by
the international tax consulting firm with whom Haemonetics has an
agreement during the years that they are on assignment.
C. Tax Reimbursement
1. Employees accepting a Temporary International Assignment may
experience an increase in personal tax liability by reason of their
receiving additional taxable expenses, or allowances, and/or by reason of
their compensation being subject to the tax laws of two locations.
2. Haemonetics will reimburse employees on a Temporary International
Assignment with a Home Country Method of Compensation for the difference
between:
a. hypothetical Home Country income tax calculated on
Company based salary, the taxable income element on Haemonetics stock
options, and outside income; and
b. actual total income tax calculated on the same Company
base salary, the taxable income element on Haemonetics stock options,
and outside income plus relocation allowances and taxable relocation
reimbursements related to the international assignment.
3. The amount of personal/outside income eligible to be included in the
tax reimbursement calculation is $10,000.00 or 15% of base salary,
whichever is greater. Capital gains from sale of home are subject to these
limits.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
4. The intent is that the employee pay neither more nor less income
taxes on base salary, the taxable income element on Haemonetics stock
options, and outside income than would have been paid by the employee if
the employee had remained in the Home Country (subject to the $10,000 or
15% of pay limit for outside/personal income stated in the previous
paragraph).
5. Haemonetics' intent is to also provide relocation allowances and
taxable relocation reimbursements to the employee net of tax liability.
6. Reimbursement of excess taxes, if any, will be paid to the employee
only if the calculation of tax reimbursement is performed by the
international tax consulting firm with whom Haemonetics has an agreement.
14. REPATRIATION
A. Employees will normally return to their Home Country at the
conclusion of the Temporary International Assignment consistent with their
Repatriation plan. The Home Country Career Manager will coordinate the
return through the Staffing Department of the Home Country.
B. The Host Manager will be responsible for providing employees with a
reasonable amount of time to meet with their Career Manager and to
interview in the Home Country prior to the planned date or return.
C. Employees paid using the Home Country Compensation Method will return
to the Home Country at their current base salary (net of housing or cost of
living allowances) at the time of repatriation.
15. CONCLUSION OF ASSIGNMENT
A. Return to Home Country
At the conclusion of the Temporary International Assignment the
employee will return to the Home Country under the provisions of the
Repatriation Policy.
B. Early Return from Temporary International Assignment
1. The Corporation may deem it appropriate to return an employee
to the Home Country prior to the planned date of return based on
changing business needs or uncorrected performance issues occurring
during the term of the assignment. In addition, early return may be
initiated by the employee based on personal or family concerns of a
serious or imperative nature.
HAEMONETICS POLICY & PROCEDURE MANUAL SECTION B2a
TEMPORARY INTERNATIONAL ASSIGNMENT POLICY
2. An employee who returns early from an international assignment
will receive the relocation provisions listed in the Repatriation
Policy.
C. Voluntary Resignation
If an employee voluntarily resigns from Haemonetics while on
Temporary International Assignment, Haemonetics provides no
relocation assistance.
D. Termination
1. Employees on Temporary International Assignment may be
terminated from the Corporation at the Host location as a result of
violations of Company rules or illegal acts in the Host Country.
2. In the event of termination of employment for these reasons,
the employee and any accompanying family members will be relocated
back to the Home Country and will receive only the following
relocation provisions:
- Travel to the Home Location
- Household Goods/Personal Effect Shipment
- Tax Consultation, Tax Preparation, Tax Equalization
3. The expense for the relocation provisions will be paid by the
Host Country Manager.
ATTACHMENT A
BALANCE SHEET COMPENSATION HYPOTHETICAL
EMPLOYEE EARNING $lOOK PER YEAR IS RELOCATED FROM US TO FRANCE; EMPLOYEE
HAS SPOUSE AND TWO CHILDREN
EMPLOYEE RECEIVES.
BASE PAY $8,333 PER MONTH *
COST OF LIVING DIFFERENTIAL $2,603 PER MONTH
HOUSING DIFFERENTIAL $2,663 PER MONTH (*Unless employee receives
reimbursement of actual costs of temporary
living)
MONTHLY PAY $13,599
PLUS TAX GROSS UP (?) To maintain employee tax obligation as
if at home.
* NOTE. ALL BENEFITS COVERAGES, AND MERIT INCREASES ARE BASED ON
BASE COMPENSATION, NOT INCLUDING ALLOWANCES.
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT, AS AMENDED
This Executive Employment Agreement (the "Agreement") is entered into
effective as of October 23, 1998 (the "Effective Date"), as amended October
7, 2000 between Ronald J. Ryan (the "Executive") residing at 19 Suffolk
Road, Sudbury, MA 01776 and Haemonetics Corporation (the "Company"), a
Massachusetts corporation with its principal executive offices at 400 Wood
Road, Braintree, Massachusetts, 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity
to serve as Senior Vice President and CFO of the Company and to perform
such specific duties as may reasonably be assigned to Executive from time
to time by the Company's President and Chief Executive Officer for the
period commencing on the Effective Date and continuing until terminated as
herein provided. Executive hereby accepts such employment for the term
hereof.
1.2 Full Time Commitment. During the period of Executive's
employment with the Company, Executive will, unless prevented by ill
health, devote his whole attention and business time to the performance of
his duties hereunder for the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, he Company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary. The Company shall pay to Executive a base salary
at the rate of $250,000 per annum until February 9, 1999 and at that time
will be reviewed for a potential change. In addition,
the executive will have a bonus plan. For FY99, the 100% performance and
payout is set at $125,000. This will also be reviewed annually to
correspond with the date of the base salary review.
2.2 Fringe Benefits. During the term of Executive's employment
hereunder the Company shall provide Executive with such benefits as are
generally made available by the Company to its other full time executive
employees, including reasonable travel expenses incurred while engaged in
Company business.
2.3 Participation in Share Option Plan. Executive shall be entitled
to participate in the Company's Non-Qualified Stock Option Plan (the
"Plan") as approved from time to time by the Board of Directors.
2.4 Option Grant. Upon execution of this Agreement, Executive shall
receive 25,000 non-qualified stock options for common stock of the Company
at the price which is the NYSE close price on October 23, 1998. All such
options shall vest 25% per year over four years, with the first 25% to vest
12 months after the date of grant, and additional 25% vesting to occur on
each of the next three 12 month anniversaries of the date of grant.
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment shall commence on February 9, 1998 and continue for an initial
period ending on January 30, 2001. Executive's employment with the Company
shall automatically be renewed on a year-to-year basis unless either party
notifies the other; party otherwise at least ninety (90) days prior to
termination of the initial term or of any renewal term.
3.2 Termination for Cause - by the Company. The Company may
terminate Executive's employment for "Cause" upon the occurrence of any of
the following events:
(i) Executive shall have engaged in (A) any misappropriation
of funds, properties or assets of the Company, (B) any malicious
damage or destruction of any property or assets of the Company,
whether resulting from Executive's willful action or omissions or
negligence, or (C) any falsification of any books, records, documents
or systems of the Company.
(ii) Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony, or (B) commit or
knowingly allow to be committed any illegal action on any premises
of, or involving any property or assets of, the Company.
3.3 Termination for Cause - by Executive. Executive may terminate
his employment with the Company for "Cause" upon the occurrence of any of
the following events:
(i) the Company shall breach any of the material provisions
of this Agreement and such breach shall remain uncured by or on
behalf of the Company within thirty (30) days following its receipt
of notice from Executive which specifically identifies the manner in
which it is alleged that Company be committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 3.4;
(iii) a materially adverse change in the responsibilities
assigned to Executive by the Company or in the compensation and
benefits paid by Company to the Executive shall have occurred such
material adverse change shall remain uncured by or on behalf of the
Company within thirty (30) days following its receipt of notice from
Executive specifically identifying such material adverse change; or
(iv) a materially adverse change in Executive's title shall
have occurred. Executive's right to terminate his employment pursuant
to this section shall not be affected by his incapacity due to
physical or mental illness. Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting a Cause for termination by the Executive or
the Company.
3.4 Chance in Control. If, following a "Change in Control'' (as
defined below), Executive's full time position with the Company is
eliminated or permanently transferred to a location other than its present
location, and following such elimination or transfer, the Company does not
offer to employ Executive in a comparable or better position iii his
current location, on a full-time basis, at a comparable or better rate of
pay then Executive shall be entitled to severance payments and benefits in
accordance with Article 4 below, provided however that severance payments
shall be made in lump sum, and in an amount which equals two (2) times then
current Base Salary. For purposes of this Agreement, a "Change in Control"
shall mean a change in control of the company of a nature that would be
required to be reported in response to Item 6(e) of Schedule I 4A of
Regulation 14A promulgated under the Securities Exchange Act of 1"4, as
amended (the "Exchange Act"), whether or not the Company is in fact,
required to comply therewith; provided that, without limitation, such a
change in control for purposes of this Agreement shall be deemed to have
occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
stockholder of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner " (as defined in Rule I 3d-3 under the Exchange Act), directly
or indirectly, of securities of the company representing 51% or more
of the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement
a recapitalization
of the company (or similar transaction) in which no "person" (as
herein above defined) acquires a 70% or more of the combined voting
power of the Company's then outstanding securities: or
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company' or an agreement for the sale or
disposition by the Company of all or substantially all of the
company's assets.
3.5 Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6 Disability. In the event of the Disability of the Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a
period of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designated by
the Company, one designated by Executive (or his personal representative)
and one designated by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the
event of the termination of the Executive's employment:
(i) by the company without "Cause", or
(ii) under Section 3.3,
then the Company shall pay Executive, as a severance payment, an amount
equal to Executive 's annual base salary as set forth in Section 2.1 and
such payment shall be made in twelve (12) equal monthly payments during the
period commencing on the date such termination occurs (the
"Termination Date") and ending one (1) year thereafter (the "Severance
Period "), together with any earned quarterly bonus.
4.2 Benefits. If Section 4.1 is applicable, the Company shall also
provide to Executive during the Severance Period, at the Company's expense,
such benefits as are in effect and applicable to Executive as of the
Termination Date, except to the extent expressly prohibited by the terms of
such benefits.
4.3 Comparable Benefits: Continuation of Benefits. If by operation
of law or under the terms of the relevant plan, program or policy,
Executive is not eligible to receive any of the payments or benefits
described in the foregoing Section 4.2 during the Severance Period, then
the Company shall provide to Executive substantially equivalent benefits
or, at Executive's election, the cash value of equivalent benefits.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article 5, the following shall have
the designated meanings.
5.1.1 Proprietary Information: Information of value to the
Company and not generally available to the public of whatever kind or
nature disclosed to the Executive or known by the Executive (whether
or not invented, discovered or developed by the Executive) as a
consequence of or through the Executive's employment with the
Company. Proprietary Information shall include information relating
to the design, manufacture, application, know-how, research and
development relating to the Company's products, sources of supply and
material, operating and other cost data, lists of present, past, or
prospective customers, customer proposals, price lists and data
relating to pricing of the Company's products or services, and shall
specifically include all information contained in manuals, memoranda,
formulae, plans, drawings and designs, specifications, supply
sources, and records of the Company legended or otherwise identified
by the Company as Proprietary Information, whether learned by the
Executive prior to or after the date hereof.
5.1.2. Concepts and Ideas: Those concepts and ideas known to
the Executive relating to the Company's present and prospective
activities and products.
5.1.3 Inventions: Discoveries and developments, whether or not
patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or
reduced to practice by the Executive, acting alone or in conjunction with
others, during or in connection with the Executive's employment (or, if
based on or related to Proprietary Information, "made" by the Executive
within twelve (12) months after the termination of such employment) and all
Concepts and Ideas held by the Executive shall be the property of the
Company, free of any reserved or other rights of any kind on the
Executive's part in respect thereof.
5.3 The Executive will promptly make full disclosure to the Company
in writing to the Manager of Engineering or the Manager of Research &
Development of any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's costs and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the Company of all
right and title to such Inventions and Concepts and Ideas, without, during
the term of this Agreement, further compensation. The absence of a request
by the Company for information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to constitute a
waiver of the Company's rights under this Agreement.
5.4 Except as required by the Executive's duties hereunder, the
Executive will not, directly or indirectly, use, publish, disseminate, or
otherwise disclose any Proprietary Information, Concepts and Ideas or
Inventions without the prior written consent of the Company.
5.5 All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services,
records, notebooks and similar repositories of or containing Proprietary
Information and Inventions, including all copies thereof, that come into
the Executive's possession or control by reasons of the Executive's
employment, whether prepared by the Executive or others, are the property
of the Company, will not be used by the Executive in any was adverse to the
Company, will not be removed from the Company's premises except as the
Executive's normal duties require and, at the termination of the
Executive's employment with the Company, will be left with or forthwith
returned by the Executive to the Company.
5.6 During the time the Executive is an employee of the Company and
for a period of one (1) year thereafter, the Executive will not engage in
any activity, on his own behalf or on behalf of any competitor of the
Company, which is in the field of blood processing and involves activities
similar to those performed at the Company, nor will the Executive endeavor
to entice away from the Company any employee whether on the Executive's
behalf or on the behalf of another while the Executive is an employee and
for a period of one (1) year thereafter.
ARTICLE 6 MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs,
successors and assigns. If Executive should die while any amount due to him
at such time remains unpaid, such amount, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his
devisee, legatee or other designee or of there is no such designee, to his
estate.
6.3 Assignment. Except as otherwise provided in Section 5.4,
neither this Agreement nor any rights or obligations hereunder shall be
assignable by either party hereto without the prior written consent of the
other party.
6.4 Obligation of the Company's Successors. Any successor to the
business of the Company, whether directly or indirectly by merger,
consolidation, recapitalization, combination, purchase of stock, purchase
of assets or otherwise, shall succeed to the rights and obligations of the
Company hereunder. The company will require any such successor to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
6.5 Notices. All notices, requests, demand and other communications
to be given pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed by registered
or certified mail, return receipt requested, postage prepaid, as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
If to Executive, to: 19 Suffolk Road
Sudbury, MA 01776
or such other address as either party hereto shall have designated by
notice in writing to the other party.
6.6 Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
6.7 Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
6.8 Severability. In case any provision hereof shall, for any
reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein. If any provision hereof shall, for
any reason, be held by a court to be excessively broad as to duration,
geographical scope, activity or subject matter, it shall be construed by
limiting and reducing it to make it enforceable to the extent compatible
with applicable law then in effect.
6.9 Withholding. Any payments provided for hereunder shall be paid
after deducting any applicable withholding required under federal, state or
local law.
6.10 Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein, and supersedes the provisions of all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any
party hereto with respect to the subject matter hereof, with the exception
of the offer letter dated January 27, 1998, points 5 (providing for four
weeks of annual vacation) and 7 (providing for a company leased
automobile). A copy of this letter is attached. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not
expressly set forth in this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the date first above written.
s/ Ronald J. Ryan s/ James L. Peterson
_____________________________ ______________________________
Ronald J. Ryan James L. Peterson
EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT, AS AMENDED
This Executive Agreement (the "Agreement") is entered into effective
as of December 5, 2000 (the "Effective Date"), as amended November 19, 2001
between Stephen C. Swenson (the "Executive") a resident at 119 Falcon
Drive, Charlottesville, Va. 22901 and Haemonetics Corporation (the
"Company"), a Massachusetts corporation with its principal executive
offices at 400 Wood Road, Braintree, Massachusetts 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity
to serve as Executive Vice President of the Company, based at the Company's
corporate offices in Braintree, Massachusetts, and to perform such specific
duties as may reasonably be assigned to Executive from time to time by the
Company's President and Chief Executive Officer for the period commencing
on the Effective Date and continuing until terminated as herein provided.
Executive hereby accepts such employment for the term hereof. Executive
agrees to complete his physical relocation to Massachusetts area by
September 1, 2002, unless otherwise mutually agreed.
1.2 Full Time Commitment. During the period of Executive's with the
Company, Executive will, unless prevented by ill health, devote his whole
attention and business time to the performance of his duties hereunder for
the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, he company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary. The Company shall pay to Executive a base salary
at the rate of $260,000 per annum. Annually the, Executive's base salary
will be reviewed for a potential change. In addition, the Executive will be
eligible to receive bonus payments, paid twice per year, beginning Q4 of
FY01, based on performance against agreed quarterly objectives. For 100%
performance the bonus payout is set at $100,000 annually (up to $25,000 per
quarter) Annually the, Executive's target bonus will be reviewed for a
potential change.
2.2 Fringe Benefits. During the term of Executive's employment
hereunder the Company shall provide Executive with such benefits as are
generally made available by the Company to its other full time executive
employees, including reasonable travel expenses incurred while engaged in
Company business.
2.3 Option Plan. Executive shall be entitled to participate further
in the Company's Non-Qualified Stock Option Plan (the "Plan") as approved
from time to time by the Board of Directors.
2.4 Option Grant. Subject to approval by the Board of Directors,
Executive shall be granted 100,000 non-qualified stock options for common
stock of the Company at the NYSE average daily price on the date on which
the Board of Director's Compensation Committee approves the grant, to be no
later than the date of the next regularly scheduled meeting of the
Compensation Committee. All such options shall vest 25% per year over four
years, with the first 25% to vest 12 months after the date of grant, and
additional 25% vesting to occur on each of the next three 12 month
anniversaries of the date of grant.
2.5 Forgivable Loan. To assist Executive's relocation to the
Massachusetts area, the Company shall make a loan to Executive in the
amount of $500,000, to be used for Executive's
purchase of a principal residence, such loan to be forgiven or repaid in
accordance with the terms of a Promissory Note between Executive and the
Company dated within next 60 days.
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment pursuant to this Employment Agreement shall commence on (date),
2000 and continue for an initial period ending on (date), 2001. Executive's
employment with the Company shall automatically be renewed on a year-to-
year basis unless either party notifies the other party otherwise in
writing at least ninety (90) days prior to termination of the initial term
or of any renewal term.
3.2 Termination for Cause - by the Company. The Company may
terminate Executive's employment for "Cause" upon the occurrence of any of
the following events:
(i) Executive shall have engaged in (A) any misappropriation
of funds, properties or assets of the Company, (B) any malicious
damage or destruction of any property or assets of the Company,
whether resulting from Executive's willful action or omissions or
negligence, or (C) any falsification of any books, records, documents
or systems of the Company.
(ii) Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony, or (B) commit or
knowingly allow to be committed any illegal action on any premises
of, or involving any property or assets of, the Company.
3.3 Termination for Cause - by Executive. Executive may
terminate his employment with the Company for "Cause" upon the occurrence
of any of the following events:
(i) the Company shall breach any of the material provisions
of the Agreement and such breach shall not have been cured by or on
behalf of the Company within thirty (30) days following its receipt
of notice from the Executive, which specifically identifies the
manner in which it is alleged that Company committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 3.4;
(iii) a materially adverse change in the responsibilities
assigned to Executive by the Company or in the compensation and
benefits paid by Company to the Executive shall have occurred and
such material adverse change shall not have been cured by or on
behalf of the Company within thirty (30) days following its receipt
of notice from Executive specifically identifying such material
adverse change; or
(iv) a materially adverse change in Executive's title shall
have occurred. Executive's continued employment shall not constitute
consent to, or waiver of rights with respect to, any circumstance
constituting a Cause for termination by the Executive or the Company.
3.4 Change in Control. If, following a "Change in Control" (as
defined below), Executive's full time position with the Company is
eliminated or permanently transferred to a location other than its present
location, and following such elimination or transfer, the Company does not
offer to employ Executive in a comparable or better position in his current
location, on a full-time basis, at a comparable or better rate of pay, then
Executive shall be entitled to severance payments and benefits in
accordance with Article 4 below, provided however that severance payments
shall be made in lump sum, and in an amount which equals one and one half
(1.5) times then current Base Salary.
If, prior to a Change in Control, Executive shall have received the
whole or any part of a Forgivable Loan as described in his Offer Letter
dated December 1, 2000, then following a Change in Control in which
severance payments and benefits are payable in accordance with Article 4
below, forgiveness of any indebtedness outstanding under said Loan shall be
accelerated in full. If the acceleration of loan forgiveness is triggered,
then Executive shall not be entitled to receive any part of the Forgivable
Loan not already disbursed as of the Change of Control.
For purposes of this Agreement, a "Change in Control" shall mean a
change in control of the company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is, in fact, required to comply
therewith; provided that, without limitation, such a change in control for
purposes of this Agreement shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
stockholder of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the company representing 51% or more of
the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the company (or similar transaction) in which
no "person" (as herein above defined) acquires 50% or more of the
combined voting power of the Company's then outstanding securities;
or
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
3.5 Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6 Disability. In the event of the Disability of the Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a
period of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designated by
the Company, one designated by Executive (or his personal representative)
and one designate by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the
event of the termination of the Executive's employment:
(i) by the Company without "Cause," or
(ii) under Section 3.3,
then the Company shall pay Executive, as a severance payment, an amount
equal to Executive's annual base salary, such payment to be made in twelve
(12) equal monthly payments during the period commencing on the date such
termination occurs (the "Termination Date") and ending one (1) year
thereafter (the "Severance Period"), together with an amount equal to
Executive's average bonus over the preceding 3 years, such payment to be
made in twelve (12) equal monthly payments commending on the date such
termination occurs and ending one (1) year thereafter.
4.2 Benefits. If Section 4.1 is applicable, the Company shall also
provide to Executive during the Severance Period, at the Company's expense,
such benefits as are in effect and applicable to Executive as of the
Termination Date, except to the extent expressly prohibited by the terms of
such benefits.
4.3 Comparable Benefits: Continuation of Benefits. If by operation
of law or under the terms of the relevant plan, program or policy,
Executive is not eligible to receive continued life insurance coverage,
long term disability coverage or the Company's matching contribution, if
any, under its 40 1(k) Plan ,then the Company shall provide to Executive
substantially equivalent benefits or, at Executive's election, the cash
value of equivalent benefits.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article, the following shall have the
designated meanings.
5.1.1. Proprietary Information: Information of value to the
Company and not generally available to the public of whatever kind or
nature disclosed to the Executive or known by the Executive (whether
or not invented, discovered or developed by the Executive) as a
consequence of or through the Executive's employment with the
Company. Proprietary Information shall include information relating
to the design, manufacture, application, know-how, research and
development relating to the Company's products, sources of supply and
materials, operating and other cost data, lists of present, past, or
prospective customers, customer proposals, price lists and data
relating to pricing of the Company's products or services, and shall
specifically include all information contained in manuals, memoranda,
formulae, plans, drawings and designs, specifications, supply
sources, and records of the Company legended or otherwise identified
by the Company as Proprietary Information, whether learned by the
Executive prior to or after the date hereof.
5.1.2 Concepts and Ideas: Those concepts and ideas known to the
Executive relating to the Company's present and prospective
activities and products.
5.1.3 Inventions: Discoveries and developments, whether or not
patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or
reduced to practice by the Executive, acting alone or in conjunction with
others, during or in connection with the Executive's employment (or, if
based on or related to Proprietary Information, "made" by the Executive
within twelve (12) months after the termination of such employment) and all
Concepts and Ideas held by the Executive shall be the property of the
Company, free of any reserved or other rights of any kind on the
Executive's part in respect thereof.
5.3 The Executive will promptly make full disclosure to the Company
in writing to the Manager of Engineering or the Manager of Research and
Development of any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's costs and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the Company of all
right and title to such Inventions and Concepts and Ideas, without, during
the term of this Agreement, further compensation. The absence of a request
by the Company for information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to constitute a
waiver of the Company's rights under this Agreement.
5.4 Except as required by the Executive's duties hereunder, the
Executive will not, directly or indirectly, use, publish, disseminate, or
otherwise disclose any Proprietary Information, Concepts and Ideas or
Inventions without the prior written consent of the Company.
5.5 All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services,
records, notebooks and similar repositories of or containing Proprietary
Information and Inventions, including all copies thereof~ that come into
the Executive's possession or control by reason of the Executive's
employment, whether prepared by the Executive or others, are the property
of the Company, will not be used by the Executive in any way adverse to the
Company, will not be removed from the Company's premises except as the
Executive's normal duties require and, at the termination of the
Executive's employment with the Company, will be left with or forthwith
returned by the Executive to the Company.
5.6 During the time the Executive is an employee of the Company and
for a period of one (1) year thereafter, the Executive will not engage in
any activity, on his own behalf or on behalf of any competitor of the
Company, which is in the field of medical devices or solutions for use in
blood processing and involves activities similar to those performed at the
Company, nor will the Executive endeavor to entice away from the Company
any employee whether on the Executive's behalf or on the behalf of another
while the Executive is an employee and for a period of one (1) year
thereafter.
ARTICLE 6. MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs,
successors and assigns. If Executive should die while any amount due to him
at such time remains unpaid, such amount, unless; otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to his
devisee, legatee or other designee or if there is no such designee, to his
estate.
6.3 Assignment. Except as otherwise provided in Section 5.4,
neither this Agreement nor any rights or obligations hereunder shall be
assignable by either party hereto without the prior written consent of the
other party.
6.4 Obligation of the Company's Successors. Any successor to the
business of the Company, whether directly or indirectly by merger,
consolidation, recapitalization, combination, purchase of stock, purchase
of assets or otherwise, shall succeed to the rights and obligations of the
Company hereunder. The Company will require any such successor to expressly
assume and agree to perform this Agreement in the same a mariner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
6.5 Notices. All notices, requests, demands and other
communications to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given if delivered by hand or mailed
by registered or certified mail, return receipt requested, postage prepaid,
as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
Attention: James L. Peterson, CEO
If to Executive, to: 119 Falcon Drive
Charlottesville, VA 22901
or such other address as either party hereto shall have designated by
notice in writing to the other party.
6.6 Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of the Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
6.7 Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
6.8 Dispute Resolution. Any dispute, controversy or claim arising
out of or relating to the Agreement or the performance by the parties of
its terms, shall be settled by binding arbitration held in Boston,
Massachusetts in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The arbitrator shall have
the authority to award relief under legal or equitable principles,
including interim or preliminary relief. Each party shall bear its/his own
attorneys fees and expenses.
6.9 Severability. In case of any provision hereof shall, for any
reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein. If any provision hereof shall, for
any reason, be held by a court to be excessively broad as to duration,
geographical scope, activity or subject matter, it shall be construed by
limiting and; reducing it to make it enforceable to the extent compatible
with applicable law then in effect.
6.10 Withholding. Any payments provided for hereunder shall be paid
after deducting any applicable withholding required under federal, state or
local law.
6.11 Entire Agreement. This Agreement sets for the entire agreement
of the parties hereto in respect of the subject matter contained herein,
and supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto
with respect to the subject matter hereof, with the exception of the Offer
Letter from Haemonetics to you dated December 1, 2000, providing for four
weeks of annual vacation. A copy of this letter is attached. No agreements
or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the dale first above written.
s/ Stephen C. Swenson s/ James L. Peterson
_____________________________ ______________________________
Stephen C. Swenson James L. Peterson
EXHIBIT 10.4
EXECUTIVE EMPLOYMENT ACREEMENT, AS AMENDED
This Executive Employment Agreement (the "Agreement") is entered into
effective as of February 1, 2000 (the "Effective Date"), as amended October
16, 2000, between Timothy Surgenor (the "Executive") resident at 201
Claybrook Road, Dover, MA 02030 and Haemonetics Corporation (the
"Company"), a Massachusetts corporation with its principal executive
offices at 400 Wood Road, Braintree, Massachusetts 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity
to serve as Executive Vice President of the Company and to perform such
specific duties as any reasonably be assigned to Executive from time to
time by the Company's President and Chief Executive Officer for the period
commencing on the Effective Date and continuing until terminated as herein
provided. Executive hereby accepts such employment for the term hereof. The
parties acknowledge that Executive will be a candidate for the position of
CEO of the Company, at a future date not yet known, and that the final
decision regarding who to appoint as CEO as well as regarding all terms and
conditions of employment as CEO shall be determined exclusively by the
Haemonetics Board of Directors or its delegate.
1.2 Full Time Commitment. During the period of Executive's
employment with the Company, Executive will, unless prevented by ill
health, devote his whole attention and business time to the performance of
his duties hereunder for the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, the company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary. The Company shall pay to Executive a base salary
at the rate of $260,000 per annum for one year, which will be reviewed for
a potential change, as of April 1, 2001 and annually thereafter. In
addition, the Executive will have a bonus plan, paid quarterly, based on
the achievement of performance objectives. For Q4 of FY00, the bonus plan
shall pay $25,000 at 100% achievement of objectives. If Executive commences
employment by at least February 1, 2000, Executive shall receive 100% of
the Q4 bonus. For FY01, the bonus plan shall pay $100,000 at 100%
achievement of objectives, and for FY01 only Executive shall be guaranteed
a minimum bonus pay out of $75,000. Executive's bonus plan will be reviewed
annually to correspond with the date of Executive's base salary review.
2.2 Fringe Benefits. During the term of Executive's employment
hereunder the Company shall provide Executive with such benefits as are
generally made available by the company to its other full time executive
employees, including reasonable travel expenses incurred while engaged in
Company business.
2.3 Participation In Share Option Plan. Executive shall be entitled
to participate in the Company's Non-Qualified Stock Option Plan (the
"Plan") as approved from time to time by the Board of Directors.
2.4 Option Grant. Upon execution of this Agreement, Executive shall
receive 250,000 non-qualified stock options for common stock of the Company
at the NYSE average daily price on the date on which the compensation
committee executes the vote not to be later than the date of the next board
meeting. All such options shall vest 25% per year over four years, with the
first 25% to vest 12 months after the respective dates of grant, and
additional 25% vesting to occur on each of the next three 12 month
anniversaries of the respective dates of grant.
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment shall commence on February 1, 2000 and continue for an initial
period ending on January 30, 2001. Executive's employment with the company
shall automatically be renewed on a year-to-year basis unless either party
notifies the other party otherwise at least ninety (90) days prior to
termination of the initial term or of any renewal term.
3.2 Termination for Cause - by the Company. The Company may
terminate Executive's employment for "Cause" upon the occurrence of any of
the following events:
(i) Executive shall have engaged in (A) any misappropriation
of funds, properties or assets of the Company, (B) any malicious
damage or destruction of any property or assets of the Company,
whether resulting from Executive's willful action or omissions or
negligence, or (C) any falsification of any books, records, documents
of systems of the Company.
(ii) Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony, or (B) commit or
knowingly allow to be committed any illegal action on any premises
of, or involving any property or assets of, the Company.
3.3 Termination for Cause - by Executive. Executive may terminate
his employment with the Company for "Cause" upon the occurrence of any of
the following events:
(i) the Company shall breach any of the material provisions
of the Agreement and such breach shall remain uncured by or on behalf
of the company within thirty (30) days following its receipt of
notice from the Executive, which specifically identifies the manner
in which it is alleged that Company committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 3.4;
(iii) a materially adverse change in the responsibilities
assigned to Executive by the Company or in the compensation and
benefits paid by Company to the Executive shall have occurred and
such material adverse change shall remain uncured by or on behalf of
the Company within thirty (30) days following its receipt of notice
from Executive specifically identifying such material adverse change;
or
(iv) a materially adverse change in Executive's title shall
have occurred. Executive's continued employment shall not constitute
consent to, or waiver of rights with respect to, any circumstance
constituting a Cause for termination by the Executive or the Company.
"Materially adverse change" in responsibilities or title, as used in
Sections 3.3 (iii) and (iv) hereof, shall not be construed to include
Executive's failure to be promoted to the position of CEO of the
Company.
3.4 Chance in Control. If following a "Change in Control" (as
defined below). Executive's full time position with the Company is
eliminated or permanently transferred to a location other than its present
location, and following such elimination or transfer, the Company does not
offer to employ Executive in a comparable or better posit ion in his
current location, on a full-time basis, at a comparable or better rate of
pay, then Executive shall be entitled to severance payments and benefits in
accordance with Article 4 below, provided however that severance payments
shall be made in lump sum, and in an amount which equals two (2) times then
current Base Salary. For purposes of this Agreement. a "Change in Control"
shall mean a change in control of the company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1"4, as
amended (the "Exchange Act"), whether or not the Company is, in fact,
required to comply therewith; provided that, without limitation, such a
change in control for purposes of this Agreement shall be deemed to have
occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an; employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
stockholder of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule I 3d-3 under the Exchange Act), directly
or indirectly, of securities of the company representing 51% or more
of the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the company (or similar transaction) in which
no "person" (as herein above defined) acquires 50% or more of the
combined voting power of the Company's then outstanding securities;
or
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
3.5 Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6 Disability. In the event of the Disability of the Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a
period of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designed by
the Company, one designated by Executive (or his personal representative)
and one designate by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the
event of the termination of the Executive's employment:
(i) by the company without "Cause," or
(ii) under Section 3.3,
then the Company shall pay Executive, as a severance payment, an
amount equal to Executive's annual base salary as set forth in section 2.1
and such payment shall be made; in twelve (12) equal monthly payments
during the period commencing on the date such termination occurs (the
"Termination Date") and ending one (1) year thereafter (the "Severance
Period"), together with a one time average bonus over the preceding 3
years, made in twelve (12) equal monthly payments commending on the date
such termination occurs and ending one (1) year thereafter.
4.2 Benefits. If Section 4.1 is applicable, the Company shall also
provide to Executive during the Severance Period, at the Company's expense,
such benefits as are in effect and applicable to Executive as of the
Termination Date, except to the extent expressly prohibited by the terms of
such benefits.
4.3 Comparable Benefits: Continuation of Benefits. If by operation
of law or under the terms of the relevant plan, program or policy,
Executive is not eligible to receive any of the payments or benefits
described in the foregoing Section 4.2 during the Severance Period, then
the Company shall provide to Executive substantially equivalent benefits
or, at Executive's election, the cash value of equivalent benefits.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article, the following shall have the
designated meanings.
5.1.1. Proprietary Information: Information of value to the
Company and not generally available to the public of whatever kind of
nature disclosed to the Executive or known by the executive (whether
or not invented, discovered or developed by the Executive) as a
consequence of or through the Executive's employment with the
Company. Proprietary Information shall include information relating
to the design, manufacture, application, know-how, research and
development
relating to the Company's products, sources of supply and; materials,
operating and other cost data, lists of present, past, or prospective
customers, customer proposals, price lists and data relating to
pricing of the Company's products or services, and shall specifically
include all information contained in manuals, memoranda, formulae,
plans, drawings and designs, specifications, supply sources, and
records of the Company legended or otherwise identified by the
company as Proprietary Information, whether learned by the Executive
prior to or after the date hereof.
5.1.2 Concepts and Ideas: Those concepts and ideas known to the
Executive relating to the Company's present prospective activities
and products.
5.1.3 Inventions: Discoveries and developments, whether or not
patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or
reduced to practice by the Executive, and all Concepts and Ideas held by
Executive, acting alone or in conjunction with others, during or in
connection with the Executive's employment (or, as to Inventions, if based
on or related to Proprietary Information, "made" by the Executive within
twelve (12) months after the termination of such employment) shall be the
property of the Company, free of any reserved or other rights of any kind
on the Executive's part in respect thereof.
5.3 The Executive will promptly make full disclosure to the Company
in writing to the Manager of Engineering or the Manager of Research and
Development of any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's costs and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the company of all
right and title to; such Inventions and Concepts and Ideas, without, during
the term of this Agreement, further compensation. The absence of a request
by the Company for information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to constitute a
waiver of the Company's rights under this Agreement.
5.4 Except as required by the Executive's duties hereunder, the
Executive will not, directly or indirectly, use, publish, disseminate, or
otherwise disclose any Proprietary Information, Concepts and Ideas or
Inventions without the prior written consent of the Company.
5.5 All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services, records, notebooks and similar repositories of or containing
Proprietary Information and Inventions, including all copies thereof, that
come into the Executive's possession or control by reasons of the
Executive's employment, whether prepared by the Executive or others, are
the property of the Company, will not be used by the Executive in any way
adverse to the Company, will not be removed from the Company's premises
except as the Executive's normal duties require and, at the termination of
the Executive's employment with the company, will be left with or forthwith
returned by the Executive to the Company.
5.6 During the time the Executive is an employee of the Company and
for a period of one (1) year thereafter, the Executive will not engage in
any activity, on his own behalf or on behalf of any competitor of the
Company, which is in the field of blood processing and involves activities
similar to those performed at the Company, nor will the Executive endeavor
to entice away from the Company any employee whether on the Executive's
behalf or on the behalf of another while the Executive is an employee and
for a period of one (1) year thereafter.
ARTICLE 6. MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall e deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs,
successors and assigns. If Executive should die while any amount due to him
at such time remains unpaid, such amount, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his
devisee, legatee or other designee or if there is no such designee, to his
estate.
6.3 Assignment. Except as otherwise provided in Section 5.4,
neither this Agreement nor any rights or obligations hereunder shall be
assignable by either party hereto without the prior written consent of the
other party.
6.4 Obligation of the Company's Successors. Any successor to the
business of the Company, whether directly or indirectly by merger,
consolidation, recapitalization, combination, purchase of stock, purchase
of assets or otherwise, shall succeed to the rights and obligations of the
Company hereunder. The Company will require any such successor to expressly
assume and agree to perform this Agreement in the same a manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
6.5 Notices. All notices, requests, demands and other
communications to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given if delivered by hand or mailed
by registered or certified mail, return receipt requested, postage prepaid,
as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
Attn: James L. Peterson, President
If to Executive, to: 201 Claybrook Road
Dover, MA 02030
or such other address as either party hereto shall have designated by
notice in writing to the other party.
6.6 Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of the Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
6.7 Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
6.8 Dispute Resolution. Any dispute, controversy or claim arising
out of or relating to this Agreement or the performance by the parties of
its terms, shall be settled by; binding arbitration held in Boston,
Massachusetts in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The arbitrator shall have
the authority to award relief under legal or equitable principles,
including interim or preliminary relief Each party shall bear its/his own
attorneys fees and expenses.
6.9 Severability. In case of any provision hereof shall, for any
reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein. If any provision hereof shall, for
any reason, be held by a court to be excessively broad as to duration,
geographical scope, activity or subject matter, it shall be construed by
limiting and reducing it to make it enforceable to the extent compatible
with applicable law then in effect.
6.10 Withholding. Any payments provided for hereunder shall be paid
after deducting any applicable withholding required under federal, state or
local law.
6.11 Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein, and supersedes the provisions of all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any
party hereto with respect to the subject matter hereof, with the exception
of the offer letter dated December 10, 1999, points 5 (providing for four
weeks of annual vacation) and 7 (providing for a Company leased
automobile). A copy of the offer letter is attached hereto. No agreements
or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement.
[THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the date first above written.
s/ Timothy Surgenor s/ James L. Peterson
_____________________________ ______________________________
Timothy Surgenor James L. Peterson
President, CEO
Haemonetics Corporation
EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT AS AMENDED
This Executive Employment Agreement (the "Agreement") is entered into
effective as of August 30, 2000 (the "Effective Date"), and amended as of
August 31, 2001, between Thomas D. Headley (the "Executive") a resident at
83 Westgate Road, Wellesley, Massachusetts 02481, and Haemonetics
Corporation (the "Company"),a Massachusetts corporation with its principal
executive offices at 400 Wood Road, Braintree, Massachusetts 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Approval by Stockholders of Transfusion Technologies
Corporation. This Agreement shall be binding upon the parties hereto only
upon approval of the payments and benefits to be provided hereunder by the
stockholders of Transfusion Technologies Corporation by a vote satisfying
the shareholder approval requirements of Section 280G(b)(5)(B) of the
Internal Revenue Code of 1986, as amended (the "Shareholder Approval"), and
upon the closing described in 1.2 below. Without such Shareholder Approval
and closing, this Agreement shall be null and void and no payments hereunder
shall be made.
1.2 Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity to
serve as Executive Vice President of the Company and to perform such
specific duties as may reasonably be assigned to Executive from time to time
by the Company's President and Chief Executive Officer for the period
commencing upon the closing of the Agreement and Plan of Merger by and among
Haemonetics Corporation, Transfusion Technologies Corporation, Transfusion
Merger Co. and certain stockholders of Transfusion Technologies (the
"Commencement Date") and continuing until two years from the Commencement
Date as herein provided. Executive hereby accepts such employment for the
term hereof.
1.3 Full Time Commitment. During the period of Executive's
employment with the Company, Executive will, unless prevented by ill health,
devote his attention and business time to the performance of his duties
hereunder for the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, the Company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary. The Company shall pay to Executive a base salary at
the rate of $230,000 per annum. In addition, the Executive will have a
target bonus based upon performance against agreed objectives. At 100%
performance against objectives, payout is set at $60,000 per year, paid
quarterly. Executive's salary will be reviewed annually and may be adjusted
at that time. Executive will also receive a sign-on bonus of $1,198,828.00,
of which $1,019,004.00 is to be paid within three (3) business days after
the Commencement Date and $179,824.00 to be paid at the end of the two year
period of employment, provided Executive is an active employee at such time.
2.2 Fringe Benefits. During the term of Executive's employment
hereunder the Company shall provide Executive with such benefits as are
generally made available by the Company to its other full-time executive
employees, including four weeks of vacation annually, and including
reasonable travel expenses incurred while engaged in Company business. For
purposes of certain Company benefits which are based upon date of hire, such
as eligibility for health benefits, and calculation of vacation accrual and
employee service awards, Executive's date of hire will be deemed to be his
date of hire by Transfusion Technologies Corporation, which is May 19, 1993.
2.3 Participation In Share Option Plan. Subject to approval by the
Board of Directors, Executive shall be granted 70,000 non-qualified stock
options to purchase common stock of the Company, in accordance with the
Company's stock option plan, at the then current market price as set forth
in the grant. The Stock Option Agreement shall provide that said options
shall vest as follows: 20,545 options shall vest immediately; 24,728 options
shall vest twelve months from the Commencement Date; and the balance of
24,727 options shall vest twenty four months from the Commencement Date.
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment pursuant to this Employment Agreement shall begin on the
Commencement Date and shall continue until two years from that date.
3.2 Termination for Cause - by the Company. The Company may
terminate Executive's employment for "Cause" upon the occurrence of any of
the following events:
(i) Executive shall have engaged in (A) any misappropriation
of funds, properties or assets of the Company, (B) any malicious
material damage or destruction of any property or assets of the
Company, whether resulting from Executive's willful action or
omissions or negligence, or (C) any knowing falsification of any
books, records, documents of systems of the Company.
(ii) Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony, or (B) commit or
knowingly allow to be committed any illegal material action on any
premises of, or involving any property or assets of, the Company.
3.3 Termination for Cause - by Executive. Executive may terminate
his employment with the Company for "Cause" upon the occurrence of any of
the following events:
(i) the Company shall breach any of the material provisions of
the Agreement and such breach shall remain uncured by or on behalf of
the Company within thirty (30) days following its receipt of notice
from the Executive, which specifically identifies the manner in which
it is alleged that Company committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 3.4;
(iii) a materially adverse change in the responsibilities
assigned to Executive by the Company or in the compensation and
benefits paid by Company to the Executive shall have occurred such
material adverse change shall remain uncured by or on behalf of the
Company within thirty (30) days following its receipt of notice from
Executive specifically identifying such material adverse change; or
3.4 Change in Control. If, following a "Change in Control" (as
defined below), Executive's full time position with the Company is
eliminated or permanently transferred to a location other than its present
location, and following such elimination or transfer, the Company does not
offer to employ Executive in a comparable or better position in his current
location, on a full-time basis, at a comparable or better rate of pay, then
Executive shall be entitled to severance payments and benefits in accordance
with Article 4 below, provided however that severance payments shall be made
in lump sum, and in an amount which equals 1.5 times then current Base
Salary and provided further that the balance of Executive's sign-on bonus
provided in section 2.1 of the Agreement shall be accelerated and paid at
the same time as the lump sum severance payment made under this new section
3.4. For purposes of this Agreement, a "Change in Control" shall mean a
change in control of the company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is, in fact, required to comply
therewith; provided that, without limitation, such a change in control for
purposes of this Agreement shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
stockholder of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the company representing 51% or more of
the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization
of the company (or similar transaction) in which no "person" (as
herein above defined) acquires 50% or more of the combined voting
power of the Company's then outstanding securities; or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
3.5 Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6 Disability. In the event of the Disability of Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a period
of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designated by
the Company, one designated by Executive (or his personal representative)
and one designated by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the event
of the termination of the Executive's employment:
(i) by the Company without "Cause," or
(ii) under Section 3.3,
the Company shall pay Executive, as a severance payment, an amount
equal to all of Executive's base salary remaining to be paid under this
employment agreement. Such payment shall be made in monthly installments
during the period commencing on the date such termination occurs and ending
two years from the Commencement Date.
4.2 Benefits. If Section 4.1 is applicable, the Company shall also
provide to Executive until two years from the Commencement Date, at the
Company's expense, such benefits as are in effect and applicable to
Executive as of the Termination Date, except to the extent expressly
prohibited by the terms of such benefit plan, program or policies.
4.3 Comparable Benefits: Continuation of Benefits . If by operation
of law or under the terms of the relevant plan, program or policy, Executive
is not eligible to receive payments or benefits described in the foregoing
Section 4.2 during the Severance Period, then the Company may choose to
provide to Executive substantially equivalent benefits or, at Executive's
election, the cash value of equivalent benefits. By way of example, this
provision shall apply to benefits or payments payable under the Company's
medical, dental, life and long term disability programs, as well as the
Company's matching contribution under the 401(k) plan. This provision shall
not apply to group travel accident coverage or to the Company's Employee
Stock Purchase Plan, which shall terminate upon termination of employment.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article, the following shall have the
designated meanings.
5.1.1. Proprietary Information: Information of value to the
Company and not generally available to the public of whatever kind of
nature disclosed to Executive or known by Executive (whether or not
invented, discovered or developed by Executive) as a consequence of or
through Executive's employment with the Company. Proprietary
Information shall include information relating to the design,
manufacture, application, know-how, research and development relating
to the Company's products, sources of supply and materials, operating
and other cost data, lists of present, past, or prospective customers,
customer proposals, price lists and data relating to pricing
of the Company's products or services, and shall specifically include
all information contained in manuals, memoranda, formulae, plans,
drawings and designs, specifications, supply sources, and records of
the Company legended or otherwise identified by the Company as
Proprietary Information, whether learned by Executive prior to or
after the date hereof.
5.1.2 Concepts and Ideas: Those concepts and ideas, in the area
of blood processing, known to Executive relating to the Company's
present and prospective activities and products.
5.1.3 Inventions: Discoveries and developments, in the area of
blood processing, whether or not patentable. Such terms shall not be
limited to the meaning of "invention" under the United States Patent
Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or
reduced to practice by Executive, acting alone or in conjunction with
others, during or in connection with Executive's employment (or, if based on
or related to Proprietary Information, "made" by Executive within twelve
(12) months after the termination of such employment) and those Concepts and
Ideas held by Executive shall be the property of the Company, free of any
reserved or other rights of any kind on Executive's part in respect thereof.
5.3 Executive will promptly make full disclosure to the Company in
writing to the Chief Executive Officer of any such Inventions and Concepts.
Further, Executive will, at the Company's costs and expense, promptly
execute formal applications for patents and also do all other acts and
things (including, among other, the execution and delivery of instruments of
further assurance or confirmation) deemed by the Company to be necessary or
desirable at any time or times in order to effect the full assignment to the
Company of all right and title to such Inventions and Concepts and Ideas,
without, during the term of this Agreement, further compensation. The
absence of a request by the Company for information, or for the making of an
oath, or for the execution of any document, shall in no way be construed to
constitute a waiver of the Company's rights under this Agreement
5.4 Except as required by Executive's duties hereunder, Executive
will not, directly or indirectly, use, publish, disseminate, or otherwise
disclose any Proprietary Information, Concepts and Ideas or Inventions
without the prior written consent of the Company.
5.5 All documents, procedural manuals, guides, specifications,
plans, drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services, records, notebooks and similar repositories of or containing
Proprietary Information and Inventions, including all copies thereof, that
come into Executive's possession or control by reasons of Executive's
employment,
whether prepared by Executive or others, are the property of the Company,
will not be used by Executive in any way adverse to the Company, will not be
removed from the Company's premises except as Executive's normal duties
require and, at the termination of Executive's employment with the Company,
will be left with or forthwith returned by Executive to the Company.
5.6 During the time Executive is an employee of the Company and for
a period of one (1) year thereafter, Executive will not engage in any
activity, on his own behalf or on behalf of any competitor of the Company,
which is in the field of blood processing and involves activities similar to
those performed at the Company, nor will Executive endeavor to entice away
from the Company any employee whether on Executive's behalf or on the behalf
of another while Executive is an employee and for a period of one (1) year
thereafter.
ARTICLE 6. MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, successors
and assigns. If Executive should die while any amount due to him at such
time remains unpaid, such amount, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there is no such designee, to his estate.
6.3 Assignment. Except as otherwise provided in Section 5.4, neither
this Agreement nor any rights or obligations hereunder shall be assignable
by either party hereto without the prior written consent of the other party.
6.4 Obligation of the Company's Successors. Any successor to the
business of the Company, whether directly or indirectly by merger,
consolidation, recapitalization, combination, purchase of stock, purchase of
assets or otherwise, shall succeed to the rights and obligations of the
Company hereunder. The Company will require any such successor to expressly
assume and agree to perform this Agreement in the same a manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
6.5 Notices. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be in
writing and shall be deemed to have been duly given if
delivered by hand or mailed by registered or certified mail, return receipt
requested, postage prepaid, as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
Attention: James L. Peterson, CEO
If to Executive, to: Thomas D. Headley
83 Westgate Road
Wellseley, Massachusetts, 02481
or such other address as either party hereto shall have designated by notice
in writing to the other party.
6.6 Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by Executive and such officer of the Company as may
be specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of the Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
6.7 Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
6.8 Severability. In case of any provision hereof shall, for any
reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein. If any provision hereof shall, for
any reason, be held by a court to be excessively broad as to duration,
geographical scope, activity or subject matter, it shall be construed by
limiting and reducing it to make it enforceable to the extent compatible
with applicable law then in effect.
6.9 Withholding. Any payments provided for hereunder shall be paid
after deducting any applicable withholding required under federal, state or
local law.
6.10 Entire Agreement. This Agreement sets for the entire agreement
of the parties hereto in respect of the subject matter contained herein, and
supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto with
respect to the subject matter hereof. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the date first above written.
Haemonetics Corporation
s/ Thomas D. Headley s/ James L. Peterson
_____________________________ ______________________________
Thomas D. Headley By: James L. Peterson
President and CEO