UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10Q
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(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
-----------Exchange Act of 1934
For the quarterly period ended June 30, 2001
OR
Transition report pursuant to Section 13 or 15 (d) of the
-----------Securities Exchange Act of 1934
Commission File Number: 000-19370
Curative Health Services, Inc.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1503914
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 Motor Parkway
Hauppauge, NY 11788-5108
(Address of principal executive offices)
Telephone Number (631) 232-7000
-------------------------------------
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), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No ______
---------
As of July 31, 2001 there were 7,158,819 shares of the Registrant's Common
Stock, $.01 par value, outstanding.
INDEX
Part I Financial Information Page No.
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Item 1 Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations
Three and Six Months ended June 30, 2001 and 2000 3
Condensed Consolidated Balance Sheets
June 30, 2001 and December 31, 2000 4
Condensed Consolidated Statements of Cash Flows
Six Months ended June 30, 2001 and 2000 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk 11
Part II Other Information Page No.
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Item 1 Legal Proceedings 12
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
2
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Curative Health Services, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenues $23,971 $21,590 $37,488 $43,790
Costs and operating expenses:
Cost of sales and services 17,173 13,684 25,270 27,668
Selling, general and administrative 6,633 7,131 11,762 13,666
----- ----- ------ ------
Total costs and operating expenses 23,806 20,815 37,032 41,334
------ ------ ------ ------
Income from operations 165 775 456 2,456
Interest income 154 617 711 1,241
--- --- --- -----
Income before taxes 319 1,392 1,167 3,697
Income taxes 309 557 665 1,473
--- --- --- -----
Net income $ 10 $ 835 $ 502 $ 2,224
=== ==== ==== ======
Net income per common share, basic $.- $.09 $.07 $.23
=== ==== ==== ====
Net income per common share, diluted $.- $.09 $.07 $.23
=== ==== ==== ====
Weighted average common shares, basic 7,116 9,008 7,119 9,510
===== ===== ===== =====
Weighted average common shares, diluted 7,545 9,153 7,451 9,755
===== ===== ===== =====
See accompanying notes
3
Curative Health Services, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2001 December 31, 2000
-----------------------------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 7,048 $ 19,016
Marketable securities held-to-maturity - 26,978
Accounts receivable, net 20,158 9,843
Deferred tax assets 3,511 2,806
Note receivable 493 -
Assets available for sale - 3,683
Inventory 1,592 -
Prepaid and other current assets 777 1,664
--- -----
Total current assets 33,579 63,990
Property and equipment, net 6,427 7,065
Goodwill 35,212 2,988
Other assets 1,116 1,123
----- -----
Total assets $ 76,334 $ 75,166
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 13,262 $ 7,308
Accrued expenses 7,600 12,288
----- ------
Total current liabilities 20,862 19,596
Stockholders' equity
Common stock 70 71
Additional paid in capital 30,297 30,896
Retained earnings 25,105 24,603
------ ------
Total stockholders' equity 55,472 55,570
------ ------
Total liabilities and stockholders' equity $ 76,334 $ 75,166
====== ======
See accompanying notes
4
Curative Health Services, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
2001 2000
-------------------------
OPERATING ACTIVITIES:
Net income $ 502 $ 2,224
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in operations of investee 242 148
Depreciation and amortization 1,680 2,499
Changes in operating assets and liabilities (4,953) 4,548
------- -----
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (2,529) 9,419
INVESTING ACTIVITIES:
Notes receivable 3,190 -
Acquisition of Millennium Health, Inc. (38,657) -
Purchase of property and equipment (350) (1,102)
Sales of marketable securities 26,978 2,428
------ -----
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (8,839) 1,326
FINANCING ACTIVITIES:
Stock repurchases (1,118) (8,309)
Proceeds from exercise of stock options 518 36
--- --
NET CASH USED IN FINANCING ACTIVITIES (600) (8,273)
----- -------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (11,968) 2,472
Cash and cash equivalents at beginning of period 19,016 16,215
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,048 $ 18,687
===== ======
SUPPLEMENTAL INFORMATION PERTAINING TO NONCASH
INVESTING AND FINANCING ACTIVITIES
In March 2000, the Company recorded an increase of $1,417,000 to its investment
in Accordant Health Services, Inc. and a corresponding increase to paid in
capital related to an increase in the value of the Company's equity interest in
Accordant.
See accompanying notes
5
Curative Health Services, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The condensed consolidated financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements for the year ended December 31, 2000 and
notes thereto contained in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission. The results of operations for
the three and six months ended June 30, 2001 are not necessarily indicative
of the results to be expected for the entire fiscal year ending December 31,
2001.
Note 2. Net Income per Common Share
Net income per common share, basic, is computed by dividing the net income by
the weighted average number of common shares outstanding. Net income per
common share, diluted, is computed by dividing net income by the weighted
average number of shares outstanding plus dilutive common share equivalents.
The following table sets forth the computation of basic and diluted earnings
per share:
Three Months Ended Six Months Ended
June 30, June 30,
-----------------------------------------
2001 2000 2001 2000
-----------------------------------------
Weighted average shares, basic 7,116 9,008 7,119 9,510
Effect of diluted stock options 429 145 332 245
--- --- --- ---
Weighted average shares, diluted 7,545 9,153 7,451 9,755
===== ===== ===== =====
Note 3. Purchase of Millennium Health, Inc.
On March 31, 2001 the Company purchased all of the outstanding capital stock of
eBiocare.com, Inc.("eBiocare") which does business as Millennium Health, Inc.
for $32.3 million in cash and the assumption and repayment of approximately $5
million in debt. eBiocare is a specialty pharmacy which contracts with insurance
companies, government and other payors to provide direct to patient distribution
of biotechnology drugs. The acquisition was accounted for as a stock purchase
and, therefore, operating results of eBiocare have been included in the
accompanying financial statements from the date of acquisition. Purchase price
allocations have been done on a preliminary basis, subject to adjustment.
Goodwill resulting from the acquisition is being amortized over a 20 year
period.
6
Curative Health Services, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Purchase of Millennium Health, Inc. (continued)
Unaudited pro forma results of operations for the six months ended June 30, 2001
and 2000, assuming the eBiocare acquisition had occurred on January 1, 2000 are
as follows (in thousands, except per share data):
Six Months Ended June 30,
2001 2000
Revenues $ 48,313 $ 58,653
====== ======
Net income $ 263 $ 522
=== ===
Net income per share, diluted $ .04 $ .05
=== ===
The pro-forma operating results shown above are not necessarily indicative of
operations in the period following acquisition.
Note 4. Segment Information (unaudited)
The Company adheres to the provisions of Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information". The Company has two reportable segments: Wound Care operations and
Specialty Pharmacy operations. In its Wound Care operations, the Company
contracts with hospitals to manage outpatient Wound Care Centers. In its
Specialty Pharmacy operations, the Company contracts with insurance companies,
government and other payors to provide direct to patient distribution of
biotechnology drugs. The Company evaluates segment performance based on income
from operations. Intercompany transactions are eliminated to arrive at
consolidated totals.
The following table presents the results of operations and total assets of the
reportable segments of the Company for the three months ended June 30, 2001
(000's omitted):
Wound Care Specialty Eliminating
Centers Pharmacy Entries Total
--------------------------------------------------
Revenues $ 12,281 $ 11,690 $ - $ 23,971
====== ====== = ======
Income from operations $ (360) $ 525 $ - $ 165
==== === = ===
Total assets $ 70,594 $ 8,196 $ (2,456) $ 76,334
====== ===== ======= ======
Note 5. Recent Accounting Pronouncements
In July 2001 the Financial Accounting Standards Board published Statement No.
142, Goodwill and Other Intangible Assets. Under Statement 142 (which supersedes
APB Opinion No. 17, Intangible Assets), goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually, or more
frequently if impairment indicators arise, for impairment. Separable intangible
assets that are not deemed to have an indefinite life will continue to be
amortized over their useful lives. The amortization provisions of Statement 142
requires non-amortization of goodwill and indefinite lived intangible assets
acquired after June 30, 2001. However, the impairment provisions of Statement
142 apply to these assets upon adoption of Statement 142. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, companies are
required to adopt Statement 142 in their fiscal year beginning after December
15, 2001 (i.e., year beginning January 1, 2002 for Curative Health Services,
Inc.). Early adoption is permitted for companies with fiscal years beginning
after March 15, 2001 provided that their first quarter financial statements have
not been issued. In all cases, the provisions of Statement 142 must be adopted
as of the beginning of a fiscal year.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Curative Health Services, Inc. is a leading disease management company that
operates in two business segments: Wound Care and Specialty Pharmaceuticals. In
its Wound Care operations, the Company contracts with hospitals to manage
outpatient Wound Care Centers. These Wound Care Centers offer a comprehensive
range of services which enable the Company to provide patient specific wound
care diagnosis and treatments on a cost effective basis. Currently, the Company
has 112 such contracts.
In its Specialty Pharmacy operations, the Company derives its revenues primarily
from the provision of biopharmaceutical drugs to individuals with chronic
conditions such as hemophilia, rheumatoid arthritis, multiple sclerosis,
hepatitis C, and others, pursuant to contracts with insurance companies,
government and other payors at contracted or allowable billing rates, and from
the provision of biopharmaceutical drugs and related product services to retail
pharmacies, pursuant to contracts with such pharmacies.
Results of Operations
Revenues. The Company's revenues for the second quarter of 2001 increased 11
percent to $23,971,000 compared to $21,590,000 for the second quarter of the
prior fiscal year. The revenue increase is attributable to the inclusion of
Specialty Pharmacy revenues of $11,690,000 related to the acquisition of
eBiocare, offset by a reduction in Wound Care Center revenues of $9,309,000. For
the first six months of 2001 revenues decreased $6,302,000 from $43,790,000 in
2000 to $ 37,488,000 for the same period in 2001, a 14 percent decrease. The
reduction in revenues for the first six months of 2001 is attributable to a
reduction in Wound Care revenues of $17,992,000 offset by the inclusion of
$11,690,000 of Specialty Pharmacy revenues. The reduction in Wound Care revenues
is attributable to the termination of 40 hospital based programs during the last
12 months, re-negotiation of existing contracts which resulted in reduced
revenue to the Company, the conversion of 15 under arrangement model programs to
management models which have lower revenue and expenses, and a reduction of
Procuren revenues as a result of a decline in Procuren patients. The reduction
in Wound Care Center revenue was partially offset by the opening of 7 new
programs over the last 12 months. The Company ended the second quarter of 2001
with 112 hospital based Wound Care Centers operating compared to 149 at the end
of the second quarter 2000. Revenues at existing centers declined 30 percent in
the second quarter of 2001 as compared to the same period in 2000, primarily due
to such contract renegotiations and declining Procuren revenues. At any time
during the year, 10% to 20% of the Company's Wound Care Center contracts are
being renegotiated with the client hospital for a variety of contractual terms
or issues. Historically, some contracts have expired without renewal and others
have been terminated by the Company or the client hospital for various reasons
prior to their scheduled expiration. Hospitals are currently facing financial
challenges associated with lower occupancy rates and reduced revenue streams due
to pricing pressures from third party payors. Program terminations by client
hospitals have been effected for such reasons as reduced reimbursement,
financial restructuring, layoffs, bankruptcies or even hospital closings.
Further, the Medicare program implemented a new reimbursement system during 2000
for hospital outpatient services which has reduced reimbursement rates to
hospitals. The termination, non-renewal or renegotiation of a material number of
management contracts could result in a continued decline in the Company's
revenue. As the result of the legal action against the Company (See Legal
Proceedings Part II item I), further unanticipated terminations or non-renewals
may take place. Additionally, new business development has been slower than
normal given the legal uncertainties facing the Company. Any inability of the
Company to develop new Wound Care Centers could continue the revenue decline.
The Company has and expects that it will continue to modify its management
contracts with many of its hospital customers which could result in reduced
8
revenue to the Company or even contract terminations.
Further, the Company has been notified by Cytomedix, Inc. that it
has exercised its option under the asset purchase agreement to close its
Procuren processing facilities. These facilities were all closed during July
2001. As a result, there will be no revenue and expenses related to Procuren in
subsequent periods other than revenues and expenses related to the dispensing of
existing inventory. Although the Company does not expect that this event will
have a material effect on its operations or financial condition other than
reducing revenues and expenses, there can be no assurance that this event will
not result in the termination of hospital contracts. The Company has a number of
initiatives to counter the decline in Wound Care Center revenue, although there
can be no assurance that the initiatives will be successful. Total new patients
to the Wound Care Centers decreased 22 percent from 15,957 in the second quarter
of 2000 to 12,448 for the same period in 2001. The total number of new patients
receiving Procuren(R) therapy decreased from 938 in the second quarter of 2000
to 238 in the second quarter of 2001. The percentage of patients receiving
Procuren(R) therapy decreased during the second quarter of 2001 to 2 percent
from 5.9 percent for the same period in 2000. For the first six months of 2001
total new patients to the Wound Care Centers decreased 19% from 31,593 in 2000
to 25,708 in 2001. The total number of new patients receiving Procuren therapy
decreased from 1,956 for the first six months of 2000 to 674 for the same period
in 2001. The percentage of patients receiving Procuren therapy decreased from 6%
in the first six months of 2000 to 3% for the same period in 2001.
Costs of Product Sales and Services. Costs of product sales and services for the
second quarter increased from $13,684,000 in 2000 to $17,173,000 in 2001, an
increase of 25 percent, and for the first six months of 2001 totaled $25,270,000
compared to $27,668,000 for the same period in 2000. For the second quarter of
2001 the increase is attributable to the inclusion of $9,931,000 of cost of
sales and services related to Specialty Pharmacy operations, offset by a
reduction in Wound Care operation costs of $6,442,000. The decrease in Wound
Care costs is attributable to reduced staffing and operating expenses of
approximately $1,516,000 related to the operation of 112 programs at the end of
the second quarter 2001 compared with 149 programs operating at the end of the
second quarter 2000, and reduced expenditures of approximately $985,000 related
to Procuren production. Additionally there were 25 fewer under-arrangement
programs in operation at the end of the second quarter of 2001 as compared to
the same period for 2000 at which the services component of costs is higher than
at the Company's other centers due to the additional clinical staffing and
expenses that these models require. For the second quarter of 2001 this
reduction in the number of under-arrangement programs accounted for
approximately $1,691,000 of the decrease in product costs and services. During
2000, the Company eliminated 58 sales positions which resulted in a reduction of
approximately $1,454,000 in product costs and services for the second quarter of
2001 as compared with the same period in 2000. As a percentage of revenues,
costs of product sales and services for the second quarter of 2001 was 72
percent compared to 63 percent for the same period in 2000. For the first six
months of 2001 cost of product sales and services decreased 9 percent. The
decrease is attributed to a reduction in Wound Care costs of $12,329,000, offset
by the inclusion of Specialty Pharmacy costs of $9,931,000. The reduction in
Wound Care costs is attributable to reduced staffing and operating expenses of
approximately $3,075,000 related to the operation of 112 programs at the end of
the second quarter 2001 compared with 149 programs operating at the end of the
second quarter 2000, and reduced expenditures of approximately $1,819,000
related to Procuren production. Additionally there were 25 fewer
under-arrangement programs in operation at the end of the second quarter of 2001
as compared to the same period for 2000 at which the services component of costs
is higher than at the Company's other centers due to the additional clinical
staffing and expenses that these models require. For the first six months of
2001 this reduction in the number of under-arrangement programs accounted for
approximately $3,192,000 of the decrease in Wound Care product costs and
services. During 2000, the Company eliminated 58 Wound Care sales positions
which resulted in a reduction of approximately $2,769,000 in product costs and
services for the first six months of 2001 as compared with the same period in
2000.
9
Selling, General and Administrative. Selling, general and administrative
expenses for the second quarter decreased from $7,131,000 in 2000 to $6,633,000
in 2001 a decrease of 8 percent. The reduction is due to a decrease in
expenditures related to Wound Care operations of $1,022,000 offset by inclusion
of $524,000 in selling, general and administrative related to Specialty
Pharmacy. The decrease in the Wound Care related expense is primarily
attributable to the positions eliminated at the Company during 2000 as well as
the closing of the Company's Dallas field office. As a percentage of revenues,
selling, general and administrative expenses were 28 percent in the second
quarter of 2001 compared to 33 percent for 2000. The decrease is due to the
increased revenue base and lower expenses in 2001. For the first six months of
2001 selling, general and administrative expenses decreased from $13,666,000 in
2000 to $11,762,000, a decrease of 14 percent. The reduction is due to a
decrease in expenditures for the Wound Care business of $2,428,000 offset by the
inclusion of $524,000 in selling, general and administrative related to the
Specialty Pharmacy business. The decrease in the Wound Care related costs is
primarily attributable to the positions eliminated at the Company during 2000 as
well as the closing of the Company's Dallas field office. As a percentage of
revenues, selling, general and administrative expenses were 31 percent for the
first six months of 2001 and 2000.
Net Income. Net income was $10,000 or a breakeven per diluted share in the
second quarter of 2001 compared to $835,000 or $0.09 per diluted share in the
first quarter of 2000. For the first six months of 2001 net income was $502,000
or $.07 per diluted share compared to $2,224 or $.23 per diluted share for the
same period in 2000. The decrease in earnings of $825,000 for the second quarter
of 2001 and the decrease of $1,722,000 in earnings for the first six months of
2001 as compared to the same periods in 2000 is attributable to reduced
operating margins in the Wound Care business as a result of the reduced revenue
and the recording of $390,000 in goodwill amortization related to the purchase
of eBiocare.com Inc., offset by the inclusion of operations of the Specialty
Pharmacy business.
Liquidity and Capital Resources.
Working capital was $12.7 million at June 30, 2001 compared to $44.4 million at
December 31, 2000. Total cash and cash equivalents as of June 30, 2001 was $7.0
million and was invested primarily in highly liquid money market funds,
commercial paper and government securities. The Company's cash and cash
equivalents and marketable securities held-to-maturity declined from $46 million
at December 31, 2000 to $7.0 million at June 30, 2001. The decline is primarily
attributable to the use of $38.7 million for the purchase of Millennium Health,
Inc. on March 30, 2001. The ratio of current assets to current liabilities was
3.3:1 at December 31, 2000 and 1.6:1 at June 30, 2001.
Cash flows used in operating activities for the first six months of 2001 totaled
$2,529,000 primarily attributable to a reduction in accounts payable and accrued
expenses. Cash flows used in investing activities totaled $8,839,000 primarily
attributable to the purchase of Millennium Health, Inc. offset by the sale of
marketable securities. Cash flows used in financing activities totaled $600,000,
primarily attributable to the Company's repurchase of shares of common stock.
For the first six months of 2001, the Company experienced a net increase in
accounts receivable of $10,315,000 primarily attributable to the purchase of
Millennium Health. Accounts receivable days outstanding were 76 days as of June
30, 2001 as compared to 61 days at December 31, 2000. Days outstanding for the
Wound Care business was 65 days and for the Specialty Pharmacy business 87 days
at June 30, 2001.
10
The Company's longer term cash requirements include working capital for the
expansion of its wound care and specialty pharmacy businesses. Other cash
requirements are anticipated for capital expenditures in the normal course of
business, the acquisition of software, computers and equipment related to the
Company's management information systems. Additionally the Company expects to
incur significant legal costs related to the Department of Justice actions and
shareholder class action lawsuits filed against the Company (See Legal
Proceedings, Part II Item 1). The Company expects that based on its current
business plan, its existing cash and cash equivalents will be sufficient to
satisfy its current working capital needs. The Company anticipates obtaining a
revolving line of credit to supplement its working capital needs as the result
of the Millennium acquisition and the Department of Justice's letter of credit
request (See Part II, Item 1). The effects of inflation and foreign currency
translation risks are considered immaterial.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company does not have operations subject to risks of material foreign
currency fluctuations, nor does it use derivative financial instruments in its
operations or investment portfolios. The Company places its investments in
instruments that meet high credit quality standards, as specified in the
Company's investment policy guidelines. The Company does not expect any material
loss with respect to its investment portfolio or exposure to market risks
associated with interest rates.
11
Curative Health Services, Inc. and Subsidiaries
Part II. Other Information
Item 1. Legal Proceedings
With respect to the Company's pending litigation and legal actions previously
disclosed, there have been no material developments other than disclosed in Item
3 - "Legal Proceedings" in the Company's Annual Report on form 10K filed for the
year ended December 31, 2000.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its 2001 annual meeting of stockholders on May 30, 2001.
Proxies for the meeting were solicited pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended, and there was no solicitation in opposition to
management's nominees as listed in the proxy statement. There were present at
the Annual Meeting in person or by proxy the holders of 6,384,260 votes. At the
meeting the stockholders elected all seven members of the Company's Board of
Directors to serve for a term of one year.
Elected members of the Board of Directors: (Shares voted affirmative in
parenthesis)
Affirmative Withheld/Against
----------- ----------------
Paul Auerbach (5,729,773) 654,487
Daniel Berce (5,730,946) 653,314
Lawrence English (5,731,073) 653,187
Joseph Feshbach (5,729,773) 654,487
Timothy I. Maudlin (5,757,546) 656,714
Gerard Moufflet (5,728,161) 656,099
John C. Prior (5,726,753) 657,507
The stockholders disapproved the following:
(a) The proposed amendments to the Curative Health Services, Inc. 2000
Stock Incentive Plan. Number of votes for were, 1,558,482, against
2,148,979 and 9,455 abstained. Broker non-votes were 2,667,344.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.33 Employment Agreement dated June 25, 2001 between Nancy Lanis
and the Company.
(b) Form 8-K
Form 8-K dated April 13, 2001, reporting under Item 2 on the acquisition of
eBiocare.com Inc. on March 30, 2001.
Form 8-K/A dated June 12, 2001, reporting under Item 7 on the financial
statements of the business acquired. This Form 8-K/A amends the Form 8-K
filed with the Securities and Exchange Commission on April 13, 2001.
12
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.
Dated: August 13, 2001
Curative Health Services, Inc.
(Registrant)
/s/ John C. Prior
------------------------------------------------
John C. Prior
President
/s/ Thomas Axmacher
------------------------------------------------
Thomas Axmacher
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as
---------
of June 25, 2001 (the "Effective Date"), between CURATIVE HEALTH SERVICES,
--------------
INC., a Minnesota corporation (the "Company"), and Nancy F. Lanis
------
("Executive").
WHEREAS, the Company wishes to retain Executive as a key
employee; and
WHEREAS, the Company and Executive want the terms and conditions
of Executive's employment to be governed by this Agreement;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Employment
1.1 Employment and Duties. The Company hereby agrees to employ Executive
for the Term (as hereinafter defined) as Senior Vice President - General
Counsel, subject to the direction of the President, and in connection therewith,
to perform such duties as she shall reasonably be directed by the President to
perform. Executive hereby accepts such employment and agrees to render such
services. Executive shall perform her duties and carry out her responsibilities
hereunder in a diligent manner, shall devote her exclusive and full working
time, attention and effort to the affairs of the Company, shall use her best
efforts to promote the interests of the Company and shall be just and faithful
in the performance of her duties and in carrying out her responsibilities.
1.2 Location. The principal location for performance of Executive's
services hereunder shall be at the Company's executive offices, which are
currently located in Hauppauge, New York, subject to reasonable travel
requirements during the course of such performance.
2. Employment Term
The term of Executive's employment hereunder (the "Term") shall be deemed
to commence on the Effective Date and shall end on the first anniversary of the
Effective Date, unless sooner terminated as hereinafter provided; provided,
however, that the Term shall be automatically renewed and extended for an
additional period of one (1) year on each anniversary thereafter unless either
party gives a Notice of Termination (as defined below) to the other party at
least three (3) months prior to such anniversary.
3. Compensation and Benefits
3.1 Cash Compensation.
-----------------
(a) Base Salary. The Company shall pay Executive an annual salary
of $200,000 payable in bi-weekly installments, in arrears (the
"Base Salary"). The Base Salary shall be reviewed annually by
the Company's Board of Directors and may be increased, but not
decreased (unless mutually agreed upon by Executive and the
Company).
(b) Signing Bonus. Executive shall be entitled to a one time
-------------
bonus payment of $15,000, payable on the six month
anniversary from the Effective Date.
(c) Bonus Plan. Executive shall be entitled to participate in
----------
the Company's Executive Bonus Compensation Program, in
accordance with and subject to the terms and provisions
thereof.
3.2 Participation in Benefit Plans. Executive shall be entitled to
participate in all employee benefit plans or programs of the Company to the
extent that her position, title, tenure, salary, age, health and other
qualifications make her eligible to participate. The Company does not guarantee
the continuance of any particular employee benefit plan or program during the
Term, and Executive's participation in any such plan or program shall be subject
to all terms, provisions, rules and regulations applicable thereto. Executive
will be entitled to twenty (20) days of vacation per year, to be used in
accordance with the Company's vacation policy for senior executives as it may
change from time to time. For the Benefit Period, if any, (as hereinafter
defined), the Company will arrange to provide Executive with welfare benefits
(including life and health insurance benefits) of substantially similar design
and cost to Executive as the welfare benefits and other employee benefits
available to Executive prior to Executive's or the Company's, as the case may
be, receipt of Notice of Termination (as hereinafter defined). In the event that
Executive shall obtain full-time employment providing welfare benefits during
the Benefit Period, such benefits as otherwise receivable hereunder by Executive
shall be discontinued.
3.3 Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by her in the
performance of her duties under this Agreement. Executive shall keep detailed
and accurate records of expenses incurred in connection with the performance of
her duties hereunder and reimbursement therefor shall be in accordance with
policies and procedures to be established from time to time by the Board.
3.4 Automobile Expenses. During the Term and in accordance with the
Company's Executive Automobile Policy, Executive shall be repaid by the Company
for the monthly lease expense for an automobile leased in the name of the
Executive and for all normal automobile operating expenses incurred by the
Executive in the performance of her duties under this Agreement.
3.5 Stock Options. On the Effective Date; the Company agrees to grant
Executive an Incentive Stock Option award for the purchase of 50,000 shares of
the Company's common stock at an exercise price equal to the fair market value
of such shares equal to the closing price of the Company's stock on the
Effective Date. Such option award will be subject to such other terms and
conditions as are set and determined by the Company's Board of Directors.
4. Termination of Employment
4.1 Definitions
(a) "Benefit Period" shall mean (i) the twelve (12) month period
commencing on the Date of Termination which occurs in connection with a
termination of employment described in the first sentence of Section 4.5(a), or
(ii) the twenty-four (24) month period commencing on the Date of Termination
which occurs in connection with a termination of employment described in the
first sentence of Section 4.5(b).
(b) "Cause" shall mean any of the following:
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(i) any act or failure to act (or series or combination
thereof) by Executive done with the intent to harm in any material respect to
the interests of the Company;
(ii) the commission by Executive of a felony;
(iii) the perpetration by Executive of a dishonest act or
common law fraud against the Company or any subsidiary thereof;
(iv) a grossly negligent act or failure to act (or series
or combination thereof) by Executive detrimental in any material respect to
the interests of the Company;
(v) the material breach by Executive of her agreements or
obligations under this Agreement; or
(vi) the continued refusal to follow the directives of the
President or Board of Directors that are consistent with Executive's duties and
responsibilities identified in Section 1.1 hereof.
(c) A "Change of Control" shall mean any of the following:
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(i) a sale of all or substantially all of the assets of
the Company;
(ii) the acquisition of more than eighty percent (80%) of the
Common Stock of the Company (with all classes or series thereof treated as a
single class) by any person or group of persons, except a Permitted Shareholder
(as hereinafter defined), acting in concert. A "Permitted Shareholder" means a
holder, as of the date of the Plan was adopted by the Company, of Common Stock;
(iii) a reorganization of the Company wherein the holders of
Common Stock of the Company receive stock in another company, a merger of the
Company with another company wherein there is an eighty percent (80%) or greater
change in the ownership of the Common Stock of the Company as a result of such
merger, or any other transaction in which the Company (other than as the parent
corporation) is consolidated for federal income tax purposes or is eligible to
be consolidated for federal income tax purposes with another corporation;
(iv) in the event that the Common Stock is traded on an
established securities market, a public announcement that any person has
acquired or has the right to acquire beneficial ownership of fifty-one percent
(51%) or more of the then-outstanding Common Stock and for this purpose the
terms "person" and "beneficial ownership" shall have the meanings provided in
Section 13(d) of the Securities and Exchange Act of 1934 or related rules
promulgated by the Securities and Exchange Commission, or the commencement of or
public announcement of an intention to make a tender offer or exchange offer for
fifty-one percent (51%) or more of the then outstanding Common Stock;
(v) a majority of the Board of Directors is not
comprised of Continuing Directors. A "Continuing Director" means a director
--------------------
recommended by the Board of Directors of the Company for election as a
director of the Company by the stockholders; or
(vi) the Board of Directors of the Company, in its sole and
absolute discretion, determines that there has been a sufficient change in the
share ownership of the Company to constitute a change of effective ownership or
control of the Company.
(d) "Good Reason" shall mean, at any time the Company's requiring
Executive to be based at a location in excess of fifty (50) miles from the
location of Executive's principal office on the effective date, or within the
twelve (12) month period immediately following a Change of Control, the
occurrence of any one or more of the following events:
(i) the assignment to Executive of any duties inconsistent in
any respect with Executive's position (including status, offices, title, and
reporting requirements), authority, duties or other responsibilities as in
effect immediately prior to the Change of Control or any other action of the
Company that results in a diminishment in such position, authority, duties or
responsibilities, other than an insubstantial and inadvertent action that is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(ii) a reduction by the Company in Executive's Base Salary as
in effect on the date hereof and as the same shall be increased from time to
time hereafter;
(iii) the Company's requiring Executive to be based at a
location in excess of fifty (50) miles from the location of Executive's
principal office immediately prior to the Change of Control;
(iv) the failure by the Company to (a) continue in effect any
material compensation or benefit plan, program, policy or practice in which
Executive was participating at the time of the Change of Control or (b) provide
Executive with compensation and benefits at least equal (in terms of benefit
levels and/or reward opportunities) to those provided for under each employee
benefit plan, program, policy and practice as in effect immediately prior to the
Change of Control (or as in effect following the Change of Control, if greater);
(v) the failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and agree to perform
this Agreement; and
(vi) any purported termination by the Company of Executive's
employment that is not effected pursuant to a Notice of Termination (as defined
below).
(e) "Date of Termination" shall mean the date specified in the
Notice of Termination (as hereinafter defined) (except in the case of
Executive's death, in which case Date of Termination shall be the date of
death); provided, however, that if Executive's employment is terminated by the
Company other than for Cause, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is
given to Executive and if Executive's employment is terminated by Executive for
Good Reason, the date specified in the Notice of Termination shall not be more
than sixty (60) days from the date the Notice of Termination is given to the
Company.
(f) "Notice of Termination" shall mean a written notice either from
the Company to Executive, or Executive to the Company, that indicates Section 2
or the specific provision of Section 4 of this Agreement relied upon as the
reason for such termination or nonrenewal, the Date of Termination, and, in
reasonable detail, the facts and circumstances claimed to provide a basis for
termination or nonrenewal pursuant to Section 2 or this Section 4 of this
Agreement.
4.2 Termination Upon Death or Disability. This Agreement, and Executive's
employment hereunder, shall terminate automatically and without the necessity of
any action on the part of the Company upon the death of Executive. In addition,
if at any time during the Term Executive shall become physically or mentally
disabled, whether totally or partially, so that she is unable substantially to
perform her duties and services hereunder for (i) a period of six (6)
consecutive months, or (ii) for shorter periods aggregating six (6) months
during any twelve (12) month period, the Company may at any time after the last
day of the sixth consecutive month of disability or the day on which the shorter
periods of disability shall have equalled an aggregate of six (6) months, by
written notice to Executive (but before Executive has recovered from such
disability), terminate this Agreement and Executive's employment hereunder.
4.3 Company's and Executive's Right to Terminate-Prior to Change of
Control. Prior to a Change of Control, this Agreement and Executive's employment
hereunder may be terminated at any time by the Company, with or without Cause,
upon thirty (30) days prior written notice to Executive, and by Executive, at
any time, upon thirty (30) days prior written notice to the Company. Any
termination of Executive's employment by the Company without Cause prior to a
Change of Control that occurs at the request or insistence of any person (other
than the Company) relating to such Change of Control shall be deemed to have
occurred after the Change of Control for the purposes of this Agreement.
4.4 Company's and Executive's Right to Terminate-Following a Change of
Control. Following a Change of Control, this Agreement and Executive's
employment hereunder may be terminated at any time (i) by the Company, with or
without Cause, upon thirty (30) days prior written notice to Executive, and (ii)
by Executive for Good Reason upon thirty (30) days prior written notice to the
Company. Executive's right to terminate her employment pursuant to this Section
4.4 shall not be affected by incapacity due to physical or mental illness.
Executive's continued employment following a Change of Control shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
4.5 Compensation Upon Termination.
-----------------------------
(a) Termination Prior to Change of Control. In the event the Company
terminates (or elects not to renew) this Agreement without Cause, or Executive
terminates (or elects not to renew) this Agreement for Good Reason and such
termination (or nonrenewal) without Cause occurs prior to any Change of Control,
Executive shall be entitled to receive her Base Salary through the Date of
Termination, the welfare benefits described in Section 3.2 for the Benefit
Period, and not later than thirty (30) days after the Date of Termination, a
lump sum severance payment equal to the sum of Executive's then Current Base
Salary plus the arithmetic average of payments made to Executive pursuant to the
Company's Executive Bonus Compensation Program with respect to the three (3)
fiscal years immediately preceding the fiscal year in which the Date of
Termination occurs. In addition, to the extent not otherwise required under the
Company's Stock Option Plan or any award agreement with Executive, any unvested
stock option awards theretofore awarded to Executive which would otherwise vest
and become exercisable during the twelve (12) month period commencing on the
Date of Termination shall vest and become exercisable on the Date of
Termination. In the event this Agreement is terminated (or not renewed) for any
reason other than by the Company without Cause, and such termination (or
nonrenewal) occurs prior to a Change of Control, Executive shall not be entitled
to the continuation of any compensation, bonuses or benefits provided hereunder,
or any other payments following the Date of Termination, other than Base Salary
earned through such Date of Termination.
(b) Termination Following Change of Control. If this Agreement is
terminated (or not renewed) (i) by the Company without Cause, or (ii) by
Executive for Good Reason during the twelve (12) month period immediately
following a Change of Control, and such termination (or nonrenewal) occurs
following a Change of Control, Executive shall be entitled to receive her full
Base Salary through the Date of Termination, the welfare benefits described in
Section 3.2 for the Benefit Period and, not later than thirty (30) days after
the Date of Termination, a lump sum severance payment equal to the product of
two (2) times the sum of Executive's then current Base Salary plus the
arithmetic average of payments made to Executive pursuant to the Company's
Executive Bonus Compensation Program with respect to the three (3) fiscal years
immediately preceding the fiscal year in which the Date of Termination occurs.
In addition, to the extent not otherwise required under the Company's Stock
Option Plan or any award agreement with Executive, any unvested stock option
awards theretofore awarded to Executive shall vest and become immediately
exercisable in full. In the event this Agreement is terminated (or not renewed)
for any reason other than (i) by the Company without Cause, or (ii) by Executive
for Good Reason, and such termination (or nonrenewal) occurs following a Change
of Control, Executive shall not be entitled to the continuation of any
compensation, bonuses or benefits provided hereunder, or any other payments
following the Date of Termination, other than Base Salary earned through the
Date of Termination.
(c) At Executive's option to be exercised by written notice to the
Company, the severance benefits payable under this Section 4.5 shall be paid in
accordance with the Company's normal payroll procedures over the twelve (12) or
twenty-four (24) month period, as the case may be, corresponding to the amount
of the payments instead of in a lump sum.
(d) Anything to the contrary contained herein notwithstanding, as a
condition to Executive receiving severance benefits to be paid pursuant to this
Section 4.5, Executive shall execute and deliver to the Company a general
release in form and substance reasonably satisfactory to the Company releasing
the Company and its officers, directors, employees and agents from all
liabilities, claims and obligations of any nature whatsoever, excepting only the
Company's obligations under this Agreement, under any Stock Option Award
Agreements, and under any other employee benefit plans or programs in which
Executive participates under Section 3.2 hereof, subject to all terms and
conditions of such plans or programs and this Agreement.
(e) Anything to the contrary contained herein notwithstanding, in
the event that any payment or benefit received or to be received by Executive in
connection with a Change in Control of the Company or termination of Executive's
employment (whether payable pursuant to the terms of this Agreement or any other
plan, contract, agreement or arrangement with the Company, with any person whose
actions result in a Change in Control of the Company or with any person
constituting a member of an "affiliated group" as defined in Section 280G(d)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), with the Company
or with any person whose actions result in a Change in Control of the Company
(collectively, the "Total Payments")) would not be deductible (in whole or in
part) by the Company or such other person making such payment or providing such
benefit solely as a result of Section 280G of the Code, the amount payable to
Executive pursuant to this Section 4.5 shall be reduced until no portion of the
Total Payments is not deductible solely as a result of Section 280G of the Code
or such amount payable to Executive pursuant to Section 4.5 is reduced to zero.
For purposes of this limitation, (a) no portion of the Total Payments the
receipt or enjoyment of which Executive shall have effectively waived in writing
prior to the date of payment of the amount pursuant to Section 4.5 shall be
taken into account; (b) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the Company and
reasonably acceptable to Executive does not constitute a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code; (c) the payment pursuant
to Section 4.5 shall be reduced only to the extent necessary so that the Total
Payments (other than those referred to in the immediately preceding clause (b))
in their entirety constitute reasonable compensation within the meaning of
Section 280G(b)(4)(B) of the Code, in the opinion of the tax counsel referred to
in the immediately preceding clause (b); and (d) the value of any other non-cash
benefit or of any deferred cash payment included in the Total Payments shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
5. Employment Covenants
5.1 Trade Secrets and Confidential Information. Executive agrees that she
shall, during the course of her employment and thereafter, hold inviolate and
keep secret all documents, materials, knowledge or other confidential business
or technical information of any nature whatsoever disclosed to or developed by
her or to which she had access as a result of her employment (hereinafter
referred to as "Confidential Information"). Such Confidential Information shall
include technical and business information, including, but not limited to,
inventions, research and development, engineering, products, designs,
manufacture, methods, systems, improvements, trade secrets, formulas, processes,
marketing, merchandising, selling, licensing, servicing, customer lists, records
or financial information, manuals or Company strategy concerning its business,
strategy or policies. Executive agrees that all Confidential Information shall
remain the sole and absolute property of the Company. During the course of her
employment, Executive shall not use, disclose, disseminate, publish, reproduce
or otherwise make available such Confidential Information to any person, firm,
corporation or other entity, except for the purpose of conducting business on
behalf of the Company. Following the Term, Executive shall not use, disclose,
disseminate, publish, reproduce or otherwise make available such Confidential
Information to any person, firm, corporation or other entity. Upon termination
of her employment with the Company, Executive will leave with or deliver to the
Company all records and any compositions, articles, devices, equipment and other
items which disclose or embody Confidential Information including all copies or
specimens thereof, whether prepared by her or by others. The foregoing
restrictions on disclosure of Confidential Information shall apply so long as
the information has not properly come into the public domain through no action
of Executive.
5.2 Transfer of Inventions. Executive, for himself and her heirs and
representatives, will promptly communicate and disclose to the Company, and upon
request will, without additional compensation, execute all papers reasonably
necessary to assign to the Company or the Company's nominees, free of
encumbrance or restrictions, all inventions, discoveries, improvements, whether
patentable or not, conceived or originated by Executive solely or jointly with
others, at the Company's expense or at the Company's facilities, or at the
Company's request, or in the course of her employment, or based on knowledge or
information obtained during the Term. All such assignments shall include the
patent rights in this and all foreign countries. Notwithstanding the foregoing,
this Section 5.2 shall not apply to any invention for which no equipment,
supplies, facilities or trade secret information of the Company was used and
which was developed entirely on Executive's own time and (a) that does not
relate (1) directly to the business of the Company or (2) to the Company's
actual or demonstrably anticipated research or development, or (b) that does not
result from any work performed by Executive for the Company.
5.3 Exclusivity of Employment. During the Term, Executive shall not
directly or indirectly engage in any activity competitive with or adverse to the
Company's business or welfare or render a material level of services of a
business, professional or commercial nature to any other person or firm, whether
for compensation or otherwise.
5.4 Covenant Not to Compete. Executive agrees to be bound and abide
-----------------------
by the following covenant not to compete:
(a) Term and Scope. During her employment with the Company and for a
period of two (2) years after the Term, Executive will not render to any
Conflicting Organization (as hereinafter defined), services, directly or
indirectly, anywhere in the world in connection with any Conflicting Product,
except that Executive may accept employment with a large Conflicting
Organization whose business is diversified (and which has separate and distinct
divisions) if Executive first certifies to the Board of Directors in writing
that she has provided a copy of Section 5 of this Agreement to such prospective
employer, that such prospective employer is a separate and distinct division of
the Conflicting Organization and that Executive will not render services
directly or indirectly in respect of any Conflicting Product (as hereinafter
defined). Such two-year time period shall be tolled during any period that
Executive is engaged in activity in violation of this covenant.
(b) Judicial Action. Executive and the Company agree that, if the
period of time or the scope of the restrictive covenant not to compete contained
in this Section 5.4 shall be adjudged unreasonable in any court proceeding, then
the period of time and/or scope shall be reduced accordingly, so that this
covenant may be enforced in such scope and during such period of time as is
judged by the court to be reasonable. In the event of a breach or violation of
this Section 5.4 by Executive, the parties agree than in addition to all other
remedies, the Company shall be entitled to equitable relief for specific
performance, and Executive hereby agrees and acknowledges that the Company has
no adequate remedy at law for the breach of the covenants contained herein.
(c) Definitions. For purposes of this Agreement, the following
-----------
terms shall have the following meanings:
"Conflicting Product" means any product, method or process, system
or service of any person or organization other than the Company, in
existence or under development at the time Executive's employment
with the Company terminates, that is the same as or similar to or
competes with a product, method or process, system or service of or
provided by the Company or any of its affiliates or about which
Executive acquires Confidential Information.
"Conflicting Organization" means any person or organization which is
engaged in or about to become engaged in, research on or
development, production, marketing, licensing, selling or servicing
of a Conflicting Product.
5.5 Disclosure to Prospective Employers. Executive will disclose to any
prospective employer, prior to accepting employment, the existence of Section 5
of this Agreement. The obligation imposed by this Section 5.5 shall terminate
two (2) years after termination of Executive's employment with the Company;
provided, however, the running of such two-year period shall be tolled to the
extent the covenant not to compete contained in Section 5.4(a) hereof is tolled.
5.6 Non-Solicitation. For one (1) year after termination of employment
with the Company for any reason, the Executive shall not directly or indirectly
solicit or hire, or assist any other person in soliciting or hiring, any
employee of the Company (as of the date of termination) or any person who, as of
the date of termination, was in the process of being recruited by the Company or
induce any such employee to terminate his or her employment with the Company.
6. Miscellaneous
6.1 Notices. Any notice required or permitted to be delivered hereunder
shall be in writing and shall be deemed to be delivered on the earlier of (i)
the date received, or (ii) the date of delivery, refusal or non-delivery
indicated on the return receipt, if deposited in a United States Postal Service
depository, postage prepaid, sent registered or certified mail, return receipt
requested, addressed to the party to receive the same at the address of such
party set forth below, or at such other address as may be designated in a notice
delivered or mailed as herein provided.
To Company: Curative Health Services, Inc.
150 Motor Parkway, 4th Flr.
Hauppauge, NY 11788
Executive: Nancy Lanis
37 Longview Road
Port Washington, NY 11050
6.2 Headings. The headings of the articles and sections of this Agreement
are inserted for convenience only and shall not be deemed a part of or affect
the construction or interpretation of any provision hereof.
6.3 Modifications; Waiver. No modification of any provision of this
Agreement or waiver of any right or remedy herein provided shall be effective
for any purpose unless specifically set forth in a writing signed by the party
to be bound thereby. No waiver of any right or remedy in respect of any
occurrence or event on one occasion shall be deemed a waiver of such right or
remedy in respect of such occurrence or event on any other occasion.
6.4 Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all other
agreements, oral or written, heretofore made with respect thereto, including,
without limitation, the Original Agreement.
6.5 Severability. Any provision of this Agreement prohibited by or
unlawful or unenforceable under any applicable law of any jurisdiction shall as
to such jurisdiction be ineffective without affecting any other provision
hereof. To the full extent, however, that the provisions of such applicable law
may be waived, they are hereby waived, to the end that this Employment Agreement
be deemed to be a valid and binding agreement enforceable in accordance with its
terms.
6.6 Controlling Law. This Agreement has been entered into by the
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parties in the State of New York and shall be continued and enforced in
accordance with the laws of that State.
6.7 Assignments. The Company shall have the right to assign this Agreement
and to delegate all rights, duties and obligations hereunder to any entity that
controls the Company, that the Company controls or that may be the result of the
merger, consolidation, acquisition or reorganization of the Company and another
entity. Executive agrees that this Agreement is personal to her and her rights
and interest hereunder may not be assigned, nor may her obligations and duties
hereunder be delegated (except as to delegation in the normal course of
operation of the Company), and any attempted assignment or delegation in
violation of this provision shall be void.
6.8 Attorney Fees. In the event of litigation between the parties, to
enforce their respective rights under this Agreement, the prevailing party shall
be entitled to receive from the non-prevailing party reimbursement of the
prevailing party's reasonable attorney's fees and costs at all levels of trial
and appeal.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the Effective Date.
CURATIVE HEALTH SERVICES, INC.
By:
Its: President
Executive