SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 14, 2003
CURATIVE HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 000-19370 41-1503914
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
150 Motor Parkway, Hauppauge, NY 11788-5145
(Address of principal executive offices) (Zip Code)
(631) 232-7000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Item 5. Other Events and Regulation FD Disclosure
The following director and executive compensation information is being
filed for the purpose of being incorporated by reference into the Company's
Registration Statement on Form S-3, filed on February 4, 2003, in accordance
with the requirements of Response 8B of Item J. of the SEC's Telephone
Interpretations Manual:
Compensation of Directors
In 2002 each non-employee director was paid an annual retainer of $12,000,
$1,000 for each Board meeting attended in person or $350 for each Board meeting
participated in by means of conference telephone. Each non-employee director
also received an annual retainer of $1,500 for each Committee on which he
served, and the chairman of the each Committee received an additional annual
retainer fee of $3,000. Non-employee directors also received a fee of $500 for
each Committee meeting attended, except for meetings held on the same date as a
Board meeting. The members of the Nominating Committee received no fees or
options for serving on that Committee.
In December 2002, the Board approved a change in compensation for
non-employee directors. Beginning in 2003, each non-employee director will be
paid an annual retainer of $15,000, $1,500 for each Board and Audit Committee
meeting and $1,250 for each non-Audit Committee meeting attended in person,
$1,000 for each Board and Audit Committee meeting and $750 for each non-Audit
Committee meeting participated in by means of conference telephone. The chairman
of the Audit Committee will receive an additional annual retainer fee of $4,000
and the chairman of each non-Audit Committee will receive an additional annual
retainer fee of $3,000.
In 1993, the Company established a Director Share Purchase Program (the
"Program") to encourage ownership of its Common Stock by its directors. Under
the program, each non-employee director can elect to forego receipt of annual
retainer and meeting fees in cash and, in lieu thereof, receive shares of Common
Stock having a market value at the date of issuance equal to the cash payment.
In 1995, the Company established a Non-Employee Director Stock Option Plan
(the "Director Plan"). The purpose of the Plan is to promote the success of the
Company by attracting and retaining non-employee directors by supplementing
their cash compensation and providing a means for such directors to increase
their holdings of Common Stock. The Company believes it is important that the
interest of the directors be aligned with those of its shareholders and that the
Director Plan strengthens that link. The Director Plan provides for an automatic
initial grant of options to purchase 15,000 shares of Common Stock, at market
value on date of grant, to a non-employee director upon his or her initial
election as a member of the Board. The Director Plan also provides for the
automatic grant of an option to purchase 15,000 shares of Common Stock, at
market value on the date of grant, each time a non-employee director is
re-elected as a member of the Board. Further, the Director Plan provided for the
automatic one time grant of an option to purchase 45,000 shares of Common Stock,
at market value on date of grant, upon a non-employee director's election as a
member of the Board at the 2002 Annual Meeting of Shareholders. Upon their
election to the Board in May 2002, the non-employee members of the Board of
Directors were each granted options to purchase 45,000 shares of Common Stock at
$13.16 per share. The Director Plan also provides that for all directors who are
granted the one time option to purchase 45,000 shares are described above, there
shall be no grants under the Director Plan in connection with the Company's 2003
and 2004 Annual Meetings of Shareholders.
Prior his employment by the Company in March 2002 as Interim Chief
Executive Officer, Mr. Feshbach was paid a monthly retainer as Executive
Chairman of the Board of $20,000 per month. In March 2002, in consideration for
extra services performed as directors, Mr. English and Mr. Maudlin were awarded
options for 10,000 and 7,500 shares, respectively, with an exercise price of
$9.69 per share and, subject to certain conditions, vesting as to one-third of
the shares after one year and thereafter in equal installments at the end of the
next eight successive three-month periods.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by (i) each person who
served as the Chief Executive Officer of the Company at any time during 2002,
(ii) the four executive officers of the Company (other than its chief executive
officer) most highly compensated in salary and bonus for 2002 who were also
serving as executive officers of the Company on December 31, 2002, and (iii) the
most highly compensated person in salary and bonus for 2002 who served as an
executive officer of the Company during 2002 but was not serving as an executive
officer on December 31, 2002 (the "named executive officers").
Annual Compensation Long Term Compensation
Other Restricted Securities All
Name and Principal Annual Stock Underlying Other
Position Year Salary Bonus Comp. Awards Options Comp.
(as of Dec. 31, 2002) ($) ($) (1) ($) (2) ($) (3) (#) ($) (4)
-----------------------------------------------------------------------------------------
Joseph Feshbach (5) 2002 313,385 - - 0 350,000 0
Chief Executive Officer
Gary Blackford (6) 2002 114,423 0 - 0 0 0
Former Chief Executive 2001 83,462 0 - 0 430,000 0
Officer
John Prior 2002 270,000 - - 0 0 1,662
President, Specialty 2001 210,915 3,240 - 86,800 20,000 3,400
Healthcare Services 2000 194,250 120,940 - 0 150,000 3,400
William Tella 2002 235,461 25,000 - 0 100,000 778
President, Specialty 2001 187,000 2,244 - 43,400 0 2,878
Pharmaceutical Services 2000 177,113 93,555 - 0 110,000 3,400
Nancy Lanis (7) 2002 200,000 51,200 - 0 100,000 2,086
Senior Vice President, 2001 96,154 15,000 - 0 50,000 0
General Counsel and
Secretary
Thomas Axmacher (8) 2002 168,539 25,000 - 0 25,000 1,279
Senior Vice President 2001 147,392 1,470 - 0 10,000 3,400
and Chief Financial
Officer
Anthony Leiker (9) 2002 270,263 7,500 - 0 0 1,273
President, eBioCare.com 2001 259,615 0 - 0 200,000 0
-----------------------------------------------------------------------------------------
(1) Amounts shown for 2002 represent discretionary bonuses awarded with respect
to particular achievements during 2002. Bonuses to be paid with respect to
2002 under the Company's Incentive Compensation Plan have not yet been
determined. The Company anticipates that they will be determined by March
1, 2003. Amounts shown for 2000 and 2001 represent awards under the
Company's Incentive Compensation Plan for the fiscal year indicated. All
such awards are actually paid in the fiscal year immediately following the
year for which the award is made.
(2) Amounts paid did not exceed the lesser of $50,000 or ten percent (10%) of
salary and bonus for any of the named individuals.
(3) The number of shares of restricted stock awarded were as follows: Mr. Prior
10,000 shares in 2001; Mr. Tella 5,000 shares in 2001. The value of such
shares is calculated using the closing price for the Company's Common Stock
on the date of the award (i.e., $8.68 for 2001 awards). As of December 31,
2002, an aggregate of 43,000 shares of restricted stock were held
by the named executive officers with an aggregate value of $741,750 based
on the closing price on that date. One third of the shares covered by these
restricted stock awards vest after one year with the balance of each award
vesting thereafter in equal installments at the end of the eight successive
three-month periods following the initial vesting date. The recipients of
these restricted stock awards are entitled to receive any dividends
declared with respect to the restricted shares.
(4) All amounts represent Company matching contributions to 401(k) plan.
Matching contributions for the fourth quarter of 2002 have not yet been
determined.
(5) Mr. Feshbach was hired as Interim Chief Executive Officer of the Company in
March 2002 and was hired as Chief Executive Officer of the Company in July
2002.
(6) Mr. Blackford was hired as Chief Executive Officer of the Company in
September 2001. Mr. Blackford was given notice of termination of his
employment in March 2002, effective in April 2002.
(7) Ms. Lanis was hired as an executive officer in June 2001.
(8) Mr. Axmacher became an executive officer in March 2001.
(9) Mr. Leiker became an executive officer in March 2001.
Stock Option Tables
The following tables summarize stock option grants and exercises during
Fiscal 2002 to or by the named executive officers, and the value of the options
held by such persons at the end of Fiscal 2002.
Option Grants in Fiscal 2002
---------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants for Option Term
---------------------------------------------------------------------------------------------
% of
Number of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 5% ($) 10% ($)
---------------------------------------------------------------------------------------------
Mr. Feshbach 50,000(2) 2.2% 9.69 3/19/2012 305,235 770,355
300,000(3) 13.1% 14.08 6/05/2012 2,661,120 6,716,160
Mr. Blackford 0 - - - - -
Mr. Prior 0 - - - - -
Mr. Tella 100,000 4.4% 9.25 3/13/2012 582,750 1,470,750
Ms. Lanis 75,000 3.3% 19.55 1/18/2012 923,738 2,331,338
5,000 0.2% 9.25 3/14/2012 29,138 73,538
20,000 0.9% 12.05 4/23/2012 151,830 383,190
Mr. Axmacher 25,000 1.1% 17.15 1/10/2012 270,113 681,713
Mr. Leiker 0 - - - - -
---------------------------------------------------------------------------------------------
(1) Except as otherwise noted, the options become exercisable after one year
with respect to one-third of the shares with the balance of the shares
becoming exercisable in equal installments on the last day of each of the
eight successive three-month periods following the initial exercisability
date.
(2) Represents options awarded to Mr. Feshbach at the commencement of his
employment as the Company's Interim Chief Executive Officer.
(3) Represents options awarded to Mr. Feshbach at the commencement of his
employment as the Company's Chief Executive Officer. These options became
exercisable as to one-fifth immediately, one-fifth after one year and
thereafter in equal installments at the end of the next eight successive
three-month periods.
Option Exercises in Fiscal 2002
and
Value at End of Fiscal 2002
-----------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the Money Options at
Shares
Acquired Value Fiscal Year End (#) Fiscal Year End ($)
On Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable (1)
Name (#) ($)
------------------------------------------------------------------------------------------------------
Mr. Feshbach 49,559 575,029 121,987 / 315,509 910,167 / 1,437,335
Mr. Blackford 100,000(2) 840,000 0 / 0 0 / 0
Mr. Prior 118,500 1,293,188 102,483 / 101,268 816,807 / 482,134
Mr. Tella 100,447 1,120,257 54,323 / 121,680 483,936 / 1,054,007
Ms. Lanis 5,000 (11,500) 20,835 / 124,165 231,685 / 307,315
Mr. Axmacher 24,000 284,256 43,618 / 37,007 303,813 / 142,518
Mr. Leiker 66,666 769,992 0 / 133,334 0 / 1,540,008
-----------------------------------------------------------------------------------------------------
(1) Calculation is based on the difference between the closing price of the
Common Stock on December 31, 2002 and the exercise price of the options
for each optionee.
(2) The shares acquired by Mr. Blackford in this exercise were subject to a
condition, which was not satisfied due to his departure from the Company
in March 2002.
Employment and Other Agreements
On July 24, 2002, Mr. Feshbach entered into an employment agreement with
the Company. Under the employment agreement, Mr. Feshbach receives an annual
salary of $400,000 and is entitled to participate in any incentive compensation
program in effect from time to time for executives of the Company. The salary
under the employment agreement is subject to annual review and increase by the
Compensation Committee. The employment agreement has an initial term of one year
and renews automatically for additional one-year periods unless notice of
termination is given at least three months prior to renewal. The Company may
terminate the employment agreement at any time with or without cause upon 30
days' prior written notice to Mr. Feshbach, and Mr. Feshbach may terminate the
employment agreement at any time upon 30 days' prior written notice to the
Company. In the event the Company terminates the employment agreement without
cause prior to a change of control (defined below) or elects not to renew, Mr.
Feshbach will be entitled to receive a lump sum severance payment equal to Mr.
Feshbach's then current base salary plus the arithmetic average of payments made
to Mr. Feshbach pursuant to the Company's Executive Bonus Compensation Program
with respect to the three years immediately preceding the fiscal year in which
the date of termination occurs (or, if Mr. Feshbach has not been employed by the
Company for three fiscal years prior to such termination, then the arithmetic
average of the annual bonus payments made to Mr. Feshbach for the fiscal year(s)
during which Mr. Feshbach was employed by the Company). In addition, to the
extent not otherwise required under the Company's stock option plan, any
unvested stock option awards that would have vested during the twelve-month
period following the date of termination shall vest and become immediately
exercisable in full. If the employment agreement is terminated (or not renewed)
by the Company without cause or by Mr. Feshbach for good reason during the
twelve-month period immediately following a change in control (or is terminated
or not renewed prior to a change in control at the request or insistence of any
person in connection with a change in control), Mr. Feshbach shall be entitled
to a lump sum severance payment equal to the product of two times the sum of the
then current annual base salary plus the arithmetic average of payments made to
Mr. Feshbach pursuant to the Company's Executive Bonus Compensation Program with
respect to the three fiscal years immediately preceding the fiscal year in which
the date of termination occurs (or, if Mr. Feshbach has not been employed by the
Company for three fiscal years prior to such termination, then the arithmetic
average of the annual bonus payments made to Mr. Feshbach for the fiscal year(s)
during which Mr. Feshbach was employed by the Company). In addition, to the
extent not otherwise required under the Company's stock option plan any unvested
stock option awards shall vest and become immediately exercisable in full. The
employment agreement also restricts Mr. Feshbach from competing with the Company
under certain circumstances during his employment with the Company and for a
period of two years thereafter.
On September 17, 2001, the Company entered into an employment agreement
with Mr. Blackford. Under the employment agreement, Mr. Blackford was entitled
to receive an annual base salary of $350,000 and to participate in any incentive
compensation program in effect from time to time for executives of the Company.
In addition, the Company agreed to grant Mr. Blackford options for the purchase
of 380,000 shares of the Company's common stock. The employment agreement had an
initial term of one year and renewed automatically for additional one-year
periods unless notice of termination was given at least three months prior to
renewal. The Company could terminate the employment agreement at any time with
or without cause upon 30 days' prior written notice to Mr. Blackford, and Mr.
Blackford could terminate the employment agreement at any time upon 60 days'
prior written notice to the Company. In the event the Company terminated (or
elected not to renew) the employment agreement without cause, or in the event
Mr. Blackford terminated the agreement due to a breach by the Company, prior to
a change of control, Mr. Blackford would be entitled to receive a lump sum
severance payment equal to Mr. Blackford's then current base salary plus,
subject to certain conditions, an amount equal to between 25% and 50% of his
then current base salary. If the employment agreement was terminated (or not
renewed) by the Company or by Mr. Blackford, for any reason, during the period
following a change in control, Mr. Blackford would be entitled to a lump sum
severance payment equal to the product of two times the sum of the then current
annual base salary plus, subject to certain conditions, an amount equal to
between 25% and 50% of his then current base salary. In addition, to the extent
not otherwise required under the Company's stock option plan or any award
agreement with Mr. Blackford, any unvested stock option awards would vest and
become immediately exercisable in full after a change in control. Mr.
Blackford's employment with the Company was terminated in March 2002. To date,
no termination or severance payments have been made to Mr. Blackford.
On September 1, 1997, the Company entered into an amended and restated
employment agreement with Mr. Prior. Under the employment agreement, Mr. Prior
initially received an annual base salary of $175,000 and is entitled to
participate in any incentive compensation program in effect from time to time
for executives of the Company. The salary under the employment agreement is
subject to annual review and increase by the Compensation Committee. The
employment agreement has an initial term of one year and renews automatically
for additional one-year periods unless notice of termination is given at least
three months prior to renewal. The Company may terminate the employment
agreement at any time with or without cause upon 30 days' prior written notice
to Mr. Prior, and Mr. Prior may terminate the employment agreement at any time
upon 30 days' prior written notice to the Company. In the event the Company
terminates the employment agreement without cause prior to a change of control
(defined below) or elects not to renew, Mr. Prior will be entitled to receive a
lump sum severance payment equal to Mr. Prior's then current base salary plus
the arithmetic average of payments made to Mr. Prior pursuant to the Company's
Executive Bonus Compensation Program with respect to the three 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, any
unvested stock option awards that would have vested during the twelve-month
period following the date of termination shall vest and become immediately
exercisable in full. If the employment agreement is terminated (or not renewed)
by the Company without cause or by Mr. Prior for good reason during the
twelve-month period immediately following a change in control (or is terminated
or not renewed prior to a change in control at the request or insistence of any
person in connection with a change in control), Mr. Prior shall be entitled to a
lump sum severance payment equal to the product of two times the sum of the then
current annual base salary plus the arithmetic average of payments made to Mr.
Prior pursuant to the Company's Executive Bonus Compensation Program with
respect to the three 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, any unvested stock option awards
shall vest and become immediately exercisable in full. The employment agreement
also restricts Mr. Prior from competing with the Company under certain
circumstances during his employment with the Company and for a period of two
years thereafter.
On June 1, 1999, Mr. Tella was promoted to Senior Vice President -
Corporate Development and Technical Services and entered into an amended and
restated employment agreement with the Company. Under the employment agreement,
Mr. Tella initially received an annual salary of $165,000 and is entitled to
participate in any incentive compensation program in effect from time to time
for executives of the Company. The salary under the employment agreement is
subject to annual review and increase by the Compensation Committee. The
employment agreement has an initial term of one year and renews automatically
for additional one-year periods unless notice of termination is given at least
three months prior to renewal. The Company may terminate the employment
agreement at any time with or without cause upon 30 days' prior written notice
to Mr. Tella, and Mr. Tella may terminate the employment agreement at any time
upon 30 days' prior written notice to the Company. In the event the Company
terminates the employment agreement without cause prior to a change of control
(defined below) or elects not to renew, Mr. Tella will be entitled to receive a
lump sum severance payment equal to Mr. Tella's then current base salary plus
the arithmetic average of payments made to Mr. Tella pursuant to the Company's
Executive Bonus Compensation Program with respect to the three 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, any
unvested stock option awards that would have vested during the twelve-month
period following the date of termination shall vest and become immediately
exercisable in full. If the employment agreement is terminated (or not renewed)
by the Company without cause or by Mr. Tella for good reason during the
twelve-month period immediately following a change in control (or is terminated
or not renewed prior to a change in control at the request or insistence of any
person in connection with a change in control), Mr. Tella shall be entitled to a
lump sum severance payment equal to the product of two times the sum of the then
current annual base salary plus the arithmetic average of payments made to Mr.
Tella pursuant to the Company's Executive Bonus Compensation Program with
respect to the three 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 any unvested stock option awards
shall vest and become immediately exercisable in full. The employment agreement
also restricts Mr. Tella from competing with the Company under certain
circumstances during his employment with the Company and for a period of two
years thereafter.
On June 25, 2001, the Company entered into an employment agreement with
Ms. Lanis. Under the employment agreement, Ms. Lanis received a one-time signing
bonus of $15,000 and an annual salary of $200,000, and is entitled to
participate in any incentive compensation program in effect from time to time
for executives of the Company. The salary under the employment agreement is
subject to annual review and increase by the Compensation Committee. The
employment agreement has an initial term of one year and renews automatically
for additional one-year periods unless notice of termination is given at least
three months prior to renewal. The Company may terminate the employment
agreement at any time with or without cause upon 30 days' prior written notice
to Ms. Lanis and Ms. Lanis may terminate the employment agreement at any time
upon 30 days' prior written notice to the Company. In the event the Company
terminates, or elects not to renew, the employment agreement without cause prior
to a change of control, Ms. Lanis will be entitled to receive a lump sum
severance payment equal to Ms. Lanis's then current base salary plus the
arithmetic average of payments made to Ms. Lanis pursuant to the Company's
Executive Bonus Compensation Program with respect to the three 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, any
unvested stock option awards that would have vested during the twelve-month
period following the date of termination shall vest and become immediately
exercisable in full. If the employment agreement is terminated (or not renewed)
by the Company without cause or by Ms. Lanis for good reason during the
twelve-month period immediately following a change in control (or is terminated
or not renewed prior to a change in control at the request or insistence of any
person in connection with a change in control), Ms. Lanis shall be entitled to a
lump sum severance payment equal to the product of two times the sum of the then
current annual base salary plus the arithmetic average of payments made to Ms.
Lanis pursuant to the Company's Executive Bonus Compensation Program with
respect to the three 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 any unvested stock option awards
shall vest and become immediately exercisable in full. The employment agreement
also restricts Ms. Lanis from competing with the Company under certain
circumstances during his employment with the Company and for a period of two
years thereafter.
On March 13, 2002, in connection with his promotion to Senior Vice
President - Finance and Chief Financial Officer, the Company entered into an
employment agreement with Mr. Axmacher. Under the employment agreement, Mr.
Axmacher receives an annual salary of $175,000 and is entitled to participate in
any incentive compensation program in effect from time to time for executives of
the Company. The salary under the employment agreement is subject to annual
review and increase by the Compensation Committee. The employment agreement has
an initial term of one year and renews automatically for additional one-year
periods unless notice of termination is given at least three months prior to
renewal. The Company may terminate the employment agreement at any time with or
without cause upon 30 days' prior written notice to Mr. Axmacher and Mr.
Axmacher may terminate the employment agreement at any time upon 30 days' prior
written notice to the Company. In the event the Company terminates, or elects
not to renew, the employment agreement without cause prior to a change of
control, Mr. Axmacher will be entitled to receive a lump sum severance payment
equal to Mr. Axmacher's then current base salary plus the arithmetic average of
payments made to Mr. Axmacher pursuant to the Company's Executive Bonus
Compensation Program with respect to the three 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, any unvested stock
option awards that would have vested during the twelve-month period following
the date of termination shall vest and become immediately exercisable in full.
If the employment agreement is terminated (or not renewed) by the Company
without cause or by Mr. Axmacher for good reason during the twelve-month period
immediately following a change in control (or is terminated or not renewed prior
to a change in control at the request or insistence of any person in connection
with a change in control), Mr. Axmacher shall be entitled to a lump sum
severance payment equal to the product of two times the sum of the then current
annual base salary plus the arithmetic average of payments made to Mr. Axmacher
pursuant to the Company's Executive Bonus Compensation Program with respect to
the three 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 any unvested stock option awards shall vest and
become immediately exercisable in full. The employment agreement also restricts
Mr. Axmacher from competing with the Company under certain circumstances during
his employment with the Company and for a period of two years thereafter.
In connection with the acquisition of eBioCare.com, Inc. in March 2001,
Mr. Leiker entered into an employment agreement with the Company. Under the
employment agreement, Mr. Leiker initially received an annual salary of $270,000
and is entitled to participate in any incentive compensation program in effect
from time to time for executives of the Company. The salary under the employment
agreement is subject to annual review and increase by the Compensation
Committee. The employment agreement has an initial term of three years and
renews automatically for additional one-year periods unless notice of
termination is given at least three months prior to renewal. The Company may
terminate the employment agreement at any time, if such termination is for
cause, or, if for any reason other than for cause, upon 30 days' prior written
notice to Mr. Leiker, and Mr. Leiker may terminate the employment agreement at
any time without notice or, if the termination is for good reason, upon 60 days'
prior written notice to the Company. In the event the Company terminates the
employment agreement without cause, or elects not to renew, prior to a change of
control, Mr. Leiker will be entitled to receive a lump sum severance payment
equal to Mr. Leiker's then current base salary plus the arithmetic average of
payments made to Mr. Leiker pursuant to the Company's Executive Bonus
Compensation Program with respect to the three 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, any unvested stock
option awards that would have vested during the twelve-month period following
the date of termination shall vest and become immediately exercisable in full.
If the employment agreement is terminated, or not renewed, by the Company
without cause or by Mr. Leiker for good reason during the twelve-month period
immediately following a change in control (or is terminated or not renewed prior
to a change in control at the request or insistence of any person in connection
with a change in control), Mr. Leiker shall be entitled to a lump sum severance
payment equal to the product of two times the sum of the then current annual
base salary plus the arithmetic average of payments made to Mr. Leiker pursuant
to the Company's Executive Bonus Compensation Program with respect to the three
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 any unvested stock option awards shall vest and
become immediately exercisable in full. The employment agreement also restricts
Mr. Leiker from competing with the Company under certain circumstances during
his employment with the Company and for a period of two years thereafter.
The options held by the executive officers of the Company provide for the
acceleration of vesting of the options upon a change in control of the Company.
For the purpose of these options, the term "change in control" includes (i) a
sale of substantially all of the Company's assets; (ii) the acquisition of more
than 50% of the outstanding Common Stock; (iii) a reorganization of the Company
in which the holders of Common Stock of the Company receive stock in another
company; (iv) a merger of the Company with another company in which there is a
50% or greater change in the ownership of the Common Stock of the Company as a
result of such merger; (v) 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; (vi) 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 50% or more of the then outstanding
Common Stock, or the commencement of or public announcement of an intention to
make a tender offer or exchange offer for 50% or more of the then outstanding
Common Stock; (vii) a change in the members of the Board of Directors such that
a majority of the Board of Directors was not recommended by the Board of
Directors for election by the shareholder; (viii) and any other transaction in
which there is a sufficient change in the share ownership of the Company to
change the effective control of the Company.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
CURATIVE HEALTH SERVICES, INC.
Date: February 14, 2003 By /s/ Thomas Axmacher
------------------
Thomas Axmacher
Chief Financial Officer