Exhibit 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
LIFE CRITICAL CARE CORPORATION
(the "Company")
AND
XXXXXX X. XXXXX
(the "Executive")
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("this Agreement") is entered into as of the
19th day of May, 1996, to be effective as of the 25th of July, 1996 between Life
Critical Care Corporation, a Delaware corporation (the "Company"), and Xxxxxx X.
Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive desire to enter into this Agreement to
insure the Company of the services of the Executive and to set forth the rights
and duties of the parties hereto;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties agree as follows:
1. Employment.
The Company hereby employs the Executive, and the Executive hereby accepts such
employment, on the terms and conditions hereinafter set forth.
During the term of this Agreement, or any renewal hereof (all references herein
to the term of this Agreement shall be deemed to include references to all
periods of renewal hereof, if any), the Executive shall devote his full and
exclusive business time, energies, attention and best efforts to the performance
of his duties hereunder, which may include travel as may reasonably be required
of him.
The Company understands that the Executive serves as an officer of M&M Business
Machines.
2. Term and Position.
The initial term of the Agreement shall be twenty-nine (29) months, commencing
as of July 25, 1996 and continuing through December 31, 1998 (the "Initial
Expiration Date"), unless sooner terminated as herein provided. The term of this
Agreement shall renew automatically for subsequent terms of one (1) year each
(each a "Renewal Term"), unless at least ninety (90) days before the Initial
Expiration Date, or at least ninety (90) days in advance of the expiration of
any subsequent Renewal Term (as the case may be), either party gives the other
party notice in writing of its intent not to renew this Agreement. As used in
this Agreement, the term "Term" shall mean either the Initial Term or any
Renewal Term, as the case may be.
During the term of this Agreement, the Executive shall be employed as the
President and Chief Executive Officer of the Company.
As President, the Executive shall be responsible for interpretation and required
implementation of the policies of the Company as determined and specified from
time to time by the Board of Directors of the Company, and he shall be
responsible for the management and expansion of the business and affairs of the
Company. As President, the Executive shall have the authority to delegate and
assign duties, responsibilities and authorities, and, in the name of the Company
and on its behalf, to negotiate and make any agreements, waivers or commitments
which do not require the express approval of the Board of Directors of the
Company.
The Executive shall immediately notify the Company of (i) his own illness and
consequent absence from work or (ii) any intended significant change in his
plans to work for the Company.
During the Term of this Agreement, the Executive shall serve in any additional
offices or positions of the Company and its subsidiaries and affiliates
(including as a member of the Company's Board of Directors and any committees
thereof) to which he may be elected or appointed by appropriate action of the
Company. The Executive shall serve in any such additional capacities without
separate compensation for so serving, unless otherwise authorized by the Board
of Directors of the Company or its shareholders.
If the Company materially and adversely changes the Executive's duties and
responsibilities without his consent or if the Company materially changes its
Business Activities without his consent, the Executive shall have the right to
terminate his employment with the Company, but such termination shall not be
considered a voluntary resignation or termination of such employment or of this
Agreement but rather a discharge of the Executive by the Company without cause.
The Executive shall be deemed not to have consented to any written proposal
calling for a material adverse change in his duties and responsibilities unless
he shall give written notice of his consent thereto to the Board of Directors of
the Company within fifteen (15) days after actual receipt of such written
proposal. If the Executive shall not have given such consent, the Company shall
have the opportunity to withdraw such proposed material change by written notice
to the Executive given within ten (10) days after the end of said fifteen (15)
day period.
3. Compensation.
a. Base Salary. As compensation for services rendered under this
Agreement, the Company shall pay the Executive, during the term of this
Agreement, a base salary (the "Base Salary") at the annual rate of
$150,000 through December 31, 1996, which Base Salary shall be
increased to the annual rate of $175,000 effective January 1, 1997
through December 31, 1997, and which Base Salary shall be increased to
the annual rate of $200,000 effective January 1, 1998 through December
31, 1998, payable not less frequently than monthly. On each January 1,
commencing on January 1, 1997, and at any time that there is a change
in the financial condition or character of the business of the Company
during the term of this Agreement, the Compensation Committee of the
Board of Directors of the Company, the majority of which will be
comprised of "outside" Directors (the "Compensation Committee") shall
review the Base Salary to determine whether or not to grant additional
increases in the Base Salary.
b. Bonuses. The Company shall pay to the Executive a sign-on bonus
payable quarterly at a rate of $7,500 per quarter through December 31,
1997. Based upon the Executive's performance during the term of this
Agreement, the Company's operating results, and such other factors as
the Compensation Committee shall determine to be appropriate,
commencing in 1997 the Executive may receive from time to time a
performance bonus of up to 50% of Base Salary, as the Compensation
Committee in its sole discretion shall authorize or agree to pay,
payable on such terms and conditions as it shall determine.
c. Stock Option Plan. The Company has established a stock incentive
plan in the form attached hereto as Exhibit A (the "Stock Incentive
Plan") that becomes effective upon the completion of the initial public
offering (the "IPO") of shares of common stock of the Company (the
"Common Stock") contemplated by the Registration Statement (the
"Effective Date"). The Stock Incentive Plan initially provides, among
other things, for the issuance from time to time to certain officers,
directors and other employees of the Company of up to 360,000 stock
options ("Options"). On the Effective Date, the Company shall grant to
the Executive 100,000 Options (the "Initial Grant") that will vest 20%
on each anniversary of the Effective Date and, to the extent vested and
subject to the further terms hereof, shall be exercisable at 90% of the
initial offering price of the Common Stock. If the Executive leaves his
employment with the Company for any reason set forth in Section 11 or
by his termination of this Agreement with good reason, all his unvested
Options shall automatically and fully vest. If the Executive leaves his
employment with the Company for any reason other than as set forth in
the
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preceding sentence, all unvested Options shall be forfeited. Upon the
Executive's termination of employment, the Executive (in the case of
his death, the Executive's personal representative or heirs) shall be
entitled to exercise all Options vested as of the date of
termination of employment at any time during the applicable unexpired
exercise period set forth in the Stock Incentive Plan.
4. Health Insurance and Other Benefits.
The Executive shall receive, at the expense of the Company, hospitalization,
major medical, disability, pension plan and such other benefits upon terms and
conditions established by the Company from time to time and consistently applied
for all of its senior executive officers.
a) Vacation. The Executive shall be entitled to annual vacation
at full pay during each twelve (12) month period, such vacation
to be of a duration equal to the greater of (i) four (4) weeks or
(ii) the time period permitted by the Company's vacation and
leave policies in effect from time to time. No more than five (5)
consecutive days may be taken at a time without the prior
notice to and consent of the Board of Directors, which consent
shall not be unreasonably delayed or withheld. In addition to
the foregoing, the Executive may be granted leaves of absence
with or without pay for such reasons as shall be mutually agreed
upon by the Board of Directors of the Company and the
Executive.
b) Employee Benefit Plan. The Executive shall be entitled to
participate in any equity or other employee benefit plan
(including but not limited to paid sick leave and holidays in
accordance with the Company's announced policy for executive
employees, as in effect from time to time, workers' compensation,
pension plans and profit sharing plans) that is generally
available to executive officers of the Company. The Executive's
participation in and benefits under any such plans shall be on the
terms and subject to the conditions specified in any governing
documents of the particular plan.
c) Automobile. The Company shall provide, at its expense, (1) a
car of the Company's choosing or (2) a car allowance of $600
per month toward the Executive's unlimited use of an
automobile to be selected by the Executive, at the Executive's
election.
d) Relocation Reimbursement. The Company shall reimburse the
Executive for Relocation Expenses incurred in connection with
relocation of up to $50,000. The Relocation Expenses shall
include moving expenses (the actual documented costs of the cost
of transporting the household and personal effects of the
Executive, his spouse and his dependent children from his former
residence to his new residence; traveling costs, including
meals and lodging, incurred by the Executive and his spouse
prior to relocation for the purpose of seeking a new residence;
and the cost of temporary quarters in the city of the Executive's
new residence pending occupancy of his new residence, but in no
event more than one hundred eighty (180) days), the
realtor's fee on the sale of the Executive's former residence,
all reasonable and customary closing and settlement costs on the
sale of his former residence, and up to two (2) points as
required by the lender for his new residence to be paid at the
closing on his new residence.
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5. Reimbursement and Financial Records.
The Company shall promptly reimburse the Executive during the term of this
Agreement or thereafter for preapproved business travel (coach class),
entertainment and other business expenses reasonably and necessarily incurred by
the Executive in the promotion of the Company's business during the term of this
Agreement. The Executive shall furnish such documentation with respect to
reimbursement to be paid under this Section 5 as the Company reasonably shall
require in order to substantiate the Company's right to claim income tax
deductions for such expenses.
6. Indemnification.
For service as a director or officer of the Company or any subsidiary of the
Company, the Executive shall be entitled to the protection of the applicable
indemnification provisions of the charter and bylaws of the Company and any such
subsidiary and to the fullest extent permitted by Delaware law. The Company
shall maintain Directors & Officers liability insurance.
7. Non-Disclosure of Information Concerning Business.
The Executive acknowledges that, in and as a result of his employment hereunder,
he will be making use of, acquiring and/or adding to confidential or proprietary
information developed by the Company and of a special and unique nature and
value to the Company, including, but not limited to, the nature and material
terms of business opportunities and proposals available to the Company, the
Company's methods, systems and research, the names and addresses of its clients,
customers and suppliers, financial records of the Company and of clients,
customers and suppliers, and other information, data, and documents now existing
or later acquired by the Executive or the Company regardless of whether any such
information, data, or documents qualify as "trade secrets" under applicable
Federal or State law (collectively, the "Confidential Information"). As a
material inducement to the Company to enter into this Agreement, and to pay the
Executive the compensation referred to herein, along with other considerations
provided herein, the Executive covenants and agrees that he shall not at any
time during the Term of this Agreement or thereafter, directly or indirectly,
divulge or disclose or use for any purpose whatsoever (except for the sole and
exclusive benefit of the Company, as reasonably required in connection with his
duties to the Company or as otherwise required by law), any Confidential
Information which has been obtained by or disclosed to him as a result of his
employment with the Company.
Notwithstanding the foregoing, Confidential Information shall not include
information:
(a) which was in the public domain at the time of the Company's
disclosure thereof to the Executive;
(b) which entered the public domain through no fault of Executive
subsequent to the time of the Company's disclosure thereof to
Executive;
(c) which was in Executive's possession free of any obligation of
confidentiality at the time of the Company's disclosure thereof to
Executive;
(d) which was disclosed to Executive in good faith by a third party
which has the right to make such disclosure subsequent to the
time of the Company's disclosure thereof to Executive; or
(e) which was disclosed by the Company to a third party free of any
obligation of confidence.
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8. Non-Competition.
The Executive acknowledges that the Company considers the Executive's services
to be rendered hereunder are of a special and unique character to the success
and continued operation of the Company's business. In recognition of the
aforesaid and the Base Salary and other compensation to be paid to the Executive
hereunder, the Executive agrees that:
During the Term of this Agreement and for the period of 12 months following the
termination of employment with the Company for any reason whatsoever (the
"Restricted Period"), the Executive shall not engage in Business Activity in any
state where the Company or any successor to the Company's business or any of
their affiliates or subsidiaries then conducts business or has conducted
business (the "Restricted Area"), or have any interest, whether as a proprietor,
partner, employee, stockholder, principal, agent, consultant, director, officer,
or in any other capacity or manner whatsoever in any enterprise that
participates in a business that has products or service that are sold or
provided by the Company at the date of such termination or within a 12 month
period prior thereto or any successor to the Company's business, or any of their
affiliates or subsidiaries ("Competitive Business") with the Company in the
Restricted Area without the prior written consent of the Company.
During the Restricted Period, the Executive will not, directly or indirectly,
solicit, induce or influence any of the Company's contacts or clients which have
or have had a business relationship with the Executive at any time during the
term of this Agreement to discontinue or reduce the extent of such relationship
with the Company.
Further, during the Restricted Period the Executive will not, directly or
indirectly, attempt or assist others in any transaction involving any
acquisition identified by the Company or the Executive during the term of this
Agreement.
During the Restricted Period and within the Restricted Area, the Executive will
not, without the prior written approval of the Company, (A) directly or
indirectly recruit, solicit or otherwise influence any employee or agent of the
Company to discontinue such employment or agency relationship with the Company,
or (B) employ or seek to employ, or cause any Competitive Business to employ or
seek to employ any person who is then (or was at any time within six (6) months
prior to the date the Executive or the Competitive Business employs or seeks to
employ such person) employed by the Company.
During the Restricted Period, the Executive will not intentionally interfere
with or disrupt or attempt to disrupt any past, present or prospective
relationship, contractual or otherwise, between the Company and any customer,
employee, supplier, vendor or agent of the Company.
9. Remedy.
The Executive covenants and agrees that if he shall violate any of his covenants
or agreements provided for pursuant to Sections 7 or 8 hereof, the Company shall
be entitled to an accounting and repayment of all profits, compensation,
commissions, remuneration, and benefits which the Executive, directly or
indirectly, has realized and/or may realize as a result of, growing out of, or
in connection with any such violation; such remedy shall be in addition to and
not in limitation of any injunctive relief or other rights or remedies to which
the Company may be entitled to at law or in equity or under this Agreement.
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10. Termination by the Company for Cause.
The Company may, at its option, immediately terminate this Agreement for "cause"
by giving written notice of termination to the Executive.
"Cause" shall mean (A) committing or participating in an injurious act of fraud,
gross neglect, material misrepresentation, embezzlement or dishonesty against
the Company or any of its affiliates or subsidiaries; (B) committing or
participating in any other injurious act or omission wantonly, willfully,
recklessly or in a manner which was grossly negligent against the Company or any
of its affiliates or subsidiaries, and which materially xxxxx the Company
including through an act of dishonesty or material conflict of interest which
relates to the performance of the Executive's duties hereunder; (C) engaging in
a criminal enterprise involving moral turpitude; (D) an act or acts constituting
a felony under the laws of the United States or any state thereof; (E)
committing a material breach of any of the provisions of Sections 7 or 8 of this
Agreement; or (F) substantial breach of contract, refusing or willfully failing
to carry out specific directions of the Board of Directors of the Company, or
willfully refusing or willfully failing to perform a material part of his duties
hereunder, provided such specific directions or performance of duties are not in
violation of law.
In the event of termination for any of the reasons set forth in this Section 10,
the Executive shall be entitled to no further compensation or other benefits
under this Agreement, except as to that portion of any unpaid Base Salary and
other benefits accrued and earned by him hereunder up to and including the date
of such termination for "cause."
11. Termination by the Company Without Cause.
If the Company terminates the Executive "without cause", which shall mean for
any reason other than the death or disability of the Executive preventing the
Executive from performing the normal functions of the Executive's job for a
period of sixty (60) days and other than as set forth in Section 10 hereof, the
Executive shall be entitled to receive from the Company a Termination Benefit
equal to the greater of (i) 100% of the Executive's annual Base Salary as in
effect on the date of his termination of employment, payable in monthly
installments on the first day of each month for the twelve (12) months
immediately following the month in which his employment terminates, or (ii) the
Executive's Base Salary, at the rate in effect for the Executive on the date of
termination, for the balance of the employment Term provided by Section 2,
payable in monthly installments for the number of months remaining in the
employment Term, on the first day of each month, immediately following the month
in which his employment terminates.
12. Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association then pertaining in Baltimore City,
Maryland, and judgment upon the award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof. The arbitrator or
arbitrators shall be deemed to possess the powers to issue mandatory orders and
restraining orders in connection with such arbitration; provided, however, that
nothing in this Section 12 shall be construed so as to deny the Company the
right and power to seek and obtain injunctive relief in a court of equity for
any breach or threatened breach by the Executive of any of his covenants
contained in Sections 7 and 8 hereof.
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13. Attorneys' Fees.
In the event any litigation, controversy or arbitration arises out of or in
connection with this Agreement between the parties hereto, each party in such
litigation, controversy or arbitration shall bear its respective attorneys'
fees, expenses and suit costs, including those associated with any appellate or
post judgment collection proceedings.
14. Time of Essence.
Time is of the essence of this Agreement and each covenant and condition
contained herein.
15. Notices and Demands.
Any notice or demand which, by any provision of this Agreement or any agreement,
document, or instrument executed pursuant hereto, except as otherwise provided
therein, is required or provided to be given shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, postage and charges prepaid, to the following address:
if to the Company: Prior to the Company's IPO
Life Critical Care Corporation
0000 X. Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Following the Company's IPO
Life Critical Care Corporation
000 X. Xxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxx 00000
with a copy to: Xxxxxx X. Xxxxxx, Esquire
Xxxxxxxxx, Xxxxxx & Preston L.L.P.
000 Xxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
or at any other address designated by the Company to the Executive in writing,
and
if to the Executive: 0000 Xxxxx Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
or at any other address designated by the Executive to the Company in writing.
16. Severability.
If any provision of this Agreement, the deletion of which would not adversely
affect the receipt of any material benefit by any party hereunder or
substantially increase the burden of any party hereto, shall be held to be
invalid or unenforceable to any extent, the same shall not affect in any respect
whatsoever the validity of enforceability of the remainder of this Agreement.
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17. Waiver of Modification.
No waiver or modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and duly executed
by the party to be charged therewith.
18. Complete Agreement.
This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter of this Agreement and supersedes any and all
previous agreements between the parties, whether written or oral, with respect
to such matter.
19. Applicable Law, Binding Effect and Venue.
This Agreement shall be construed and regulated under and by the laws of the
State of Maryland, and shall inure to the benefit of and be binding upon the
parties hereto and their heirs, personal representatives, successors and
assigns. Venue for any arbitration or action related to or arising out of this
Agreement shall lie in Baltimore City, Maryland. The Company shall not effect
any merger, consolidation or sale of all or substantially all of its assets
unless prior to or simultaneous with its consummation the successor entity (if
other than the Company) resulting from such transaction, or the entity
purchasing the Company's assets, assumes all the obligation of the Company under
this Agreement.
20. Section Headings.
Section headings used throughout this Agreement are for reference and
convenience and in no way define, limit or describe the scope or intent of this
Agreement or affect its provisions.
21. Multiple Copies or Counterparts of Agreement.
The original and one or more copies of this Agreement may be executed by one or
more of the parties hereto. In such event, all of such executed copies shall
have the same force and effect as the executed original and all of such
counterparts taken together shall have the effect of a fully executed original.
This Agreement shall have no effect unless and until signed in counterparts or
otherwise by all parties set forth in the first paragraph of this Agreement.
22. Opportunity to Employ Counsel.
The Executive acknowledges receipt of a copy of this Agreement prior to his
employment by the Company and also acknowledges that he has had ample time and
opportunity to employ counsel of his choice to provide advice concerning the
terms and conditions of this Agreement and the Executive's prospective
employment with the Company.
23. Definitions.
The term "Business Activity" shall be deemed to include any business activity
relating to home health services and home medical equipment sales and services
and any additional activities which the Company may engage in during the term of
this Agreement.
The term "subsidiary" shall mean any entity deemed to be a subsidiary of the
Company under the rules and regulations of the United States Securities and
Exchange Commission.
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IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement on the day and year first set forth above.
LIFE CRITICAL CARE CORPORATION,
a Delaware corporation
By: _________________________
its authorized signatory
WITNESS:
_________________________ _________________________ Date: _______________
Xxxxxx X. Xxxxx
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