EMPLOYMENT AGREEMENT
Exhibit 10.1
EMPLOYMENT
AGREEMENT, dated as of November 12, 2008, by and between GENTIVA HEALTH
SERVICES, INC., a Delaware corporation (the “Company”), and XXXXXX X. XXXXXX
(“Executive”).
WITNESSETH:
WHEREAS,
the Company desires that Executive continue to serve as Chairman and Chief
Executive Officer of the Company as set forth herein and Executive is willing to
continue to serve in those capacities;
WHEREAS,
the Company and Executive wish to enter into a new agreement embodying the terms
of his continued employment (the “Agreement”); and
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
Company and Executive hereby agree as follows:
1. Employment. Upon
the terms and subject to the conditions of this Agreement, the Company hereby
agrees to employ Executive and Executive hereby agrees to his employment by the
Company until December 31, 2009 unless this Agreement is sooner terminated
as set forth herein. The period during which Executive is employed
pursuant to this Agreement shall be referred to as the “Employment
Period.”
2. Position and
Duties.
(a) Position. During
the Employment Period, Executive shall serve as Chairman and Chief Executive
Officer of the Company and shall be nominated for election, and if so elected,
shall serve as a member of the Board of Directors of the Company (the “Board”);
provided,
however, that the Company, in its sole discretion, may direct that
Executive will, at any time after December 31, 2008, serve only as Chairman
of the Company for the remainder of the Employment Period on the terms, and
subject to the conditions, set forth herein. In addition, Executive
shall serve in such other position or positions with the Company and its
subsidiaries commensurate with his position and experience, as the Board shall
from time to time specify. Executive acknowledges that the nature of
his duties shall require reasonable domestic travel from time to
time.
(b) Duties. During
the portion of the Employment Period during which he is serving as Chairman and
Chief Executive Officer of the Company, Executive shall have the duties,
responsibilities and obligations customarily assigned to individuals serving as
the chairman and chief executive officer of comparable
companies. During the portion of the Employment Period, if any,
during which he is serving only as Chairman of the Company, Executive shall have
the duties, responsibilities and obligations assigned to him by the Board; provided, however,
that no such duties, responsibilities or obligations shall be inconsistent with
his status as Chairman of the Company. During the Employment Period,
Executive shall have such other duties, responsibilities and obligations as the
Board shall from time to time specify. Executive shall devote his
full time to the services required of him hereunder, except for vacation time
and reasonable periods of absence due to sickness, personal injury or other
disability, and shall use his best efforts, judgment, skill and energy to
perform such services in a manner consonant with
the
duties of his position and to improve and advance the business and interests of
the Company and its subsidiaries; provided however,
that during any portion of the Employment Period during which Executive is
serving only as Chairman of the Company, he shall devote substantially all of
his time to the services hereunder (except for vacation time and reasonable
periods of absence due to sickness, personal injury or other disability), and,
in all events, Executive shall devote such time to the services hereunder as
reasonably requested by the Company. Nothing contained in this
Section 2 shall preclude Executive from (i) serving on the board of directors of
any business corporation, unless such service would be contrary to applicable
law, with prior approval from the Board, (ii) serving on the board of, or
working for, any charitable or community organization, or (iii) pursuing his
personal financial and legal affairs, so long as such activities, individually
or collectively, do not interfere with the performance of Executive’s duties
hereunder or violate any of the provisions of Section 6 hereof.
3. Compensation.
(a) Base
Salary. During the Employment Period the Company shall pay
Executive a base salary at the annual rate of $750,000 per annum. The
annual base salary payable under this Section shall be reduced, however, to the
extent Executive elects to defer such salary under the terms of any deferred
compensation or savings plan or arrangement maintained or established by the
Company or any other arrangement acceptable to the Company. The Board
(or the appropriate committee of the Board) shall annually review Executive’s
base salary in light of competitive practices, the base salaries paid to other
executive officers of the Company and the performance of Executive and the
Company, and may, in its discretion, increase such base salary by an amount it
determines to be appropriate. Any such increase shall not reduce or
limit any other obligation of the Company hereunder. Executive’s base
salary (as set forth or as may be increased from time to time) shall not be
reduced, except that Executive’s base salary may be reduced in proportion to
comparable reductions in the base salaries of the Company’s executive officers
(as determined for purposes of Section 16(b) of the Securities Exchange Act of
1934, as amended). Executive’s annual base salary payable hereunder,
as it may be increased (or reduced as set forth above) from time to time and
without reduction for any amounts deferred as described above is referrer to
herein as “Base Salary.” The Company shall pay Executive the portion
of his Base Salary not deferred in accordance with the Company’s payroll
practices applicable to its other executive officers.
(b) Annual
Bonus. For each fiscal year ending during the Employment
Period, Executive shall have the opportunity to receive an annual bonus (“Annual
Target Bonus Opportunity”), based on the achievement of target levels of
performance, equal to 100% of his Base Salary, so long as Executive is employed
on the last day of the fiscal year. Depending on actual results as
measured against the performance objectives established, Executive’s actual
bonus payment may range from zero to a maximum of 150% (or such other greater
amount as determined by the Board or a committee thereof) of Executive’s Base
Salary for each full fiscal year during the Employment Period; provided, however,
that, so long as Executive remains employed through December 31, 2009,
Executive’s annual bonus for 2009 will not be less than 75% of his Base Salary
for 2009.
The
actual bonus, if any, payable for any such year shall be determined in
accordance with the terms of the Company’s Executive Officers’ Bonus Plan (the
“Annual Plan”) or any successor plan, based upon the performance of the Company
and/or Executive against target
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objectives
established under such Annual Plan. The determination of whether and
to what extent the requisite performance objectives have been met shall be made
by the Board or the Board committee responsible for administering the Annual
Plan, whose determination shall be final. Subject to Executive’s
election to defer all or a portion of any annual bonus payable hereunder
pursuant to the terms of any deferred compensation or savings plan or
arrangement maintained or established by the Company, any annual bonus payable
under this Section 3(b) shall be paid to Executive in accordance with the terms
of the Annual Plan; provided, however, any portion
of Executive’s annual bonus which would not be deductible to the Company
pursuant to the provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”), shall be deferred; provided further,
however, that Executive’s annual bonus for 2009 shall be paid to him in a
single lump sum, subject to Section 10(o) below, on March 17,
2010. Any portion of Executive’s annual bonus which is deferred in
accordance with this Section 3 because it would otherwise not be deductible due
to Section 162(m) of the Code shall be paid to Executive in a single lump sum,
subject to Section 10(o) below, ten (10) days following Executive’s
“separation from service” (as defined in Treas. Reg. § 1.409A-1(h)) with
the Company for any reason and shall be credited with interest, on a compounded
basis, on the last day of each calendar quarter, at 1% above the prime rate (as
reported in The Wall Street Journal, Eastern Edition), as in effect on the first
day of each such calendar quarter.
4. Benefits, Perquisites and
Expenses.
(a) Benefits. During
the Employment Period, Executive shall be eligible to participate in (i) each
welfare benefit plan sponsored or maintained by the Company (other than, except
for severance benefits set forth in Section 5 below, severance plans),
including, without limitation, each group life, hospitalization, medical,
dental, health, accident or disability insurance or similar plan or program of
the Company, and (ii) each pension, retirement, deferred compensation, savings
or employee stock purchase plan sponsored or maintained by the Company, and
(iii) to the extent of any awards made from time to time by the Board committee
administering the plan, each stock option, restricted stock, stock bonus or
similar equity-based compensation plan sponsored or maintained by the Company,
in each case, whether now existing or established hereafter, and (iv) any other
plans sponsored or maintained by the Company in which other executive officers
are eligible to participate, to the extent that Executive is eligible to
participate in any such plan under the generally applicable provisions
thereof. Nothing in this Section 4(a) shall limit the Company’s right
to amend or terminate any such plan in accordance with the procedures set forth
therein.
(b) Perquisites. During
the Employment Period, Executive shall be entitled to at least four weeks’ paid
vacation annually and shall also be entitled to receive such perquisites as are
generally provided to other executive officers of the Company in accordance with
the then current policies and practices of the Company.
(c) Business
Expenses. During the Employment Period, the Company shall pay
or reimburse Executive for all reasonable expenses incurred or paid by Executive
in the performance of Executive’s duties hereunder, upon presentation of expense
statements or vouchers and such other information as the Company may require and
in accordance with the generally applicable policies and procedures of the
Company.
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(d) Indemnification. The
Company shall defend Executive, indemnify Executive and hold Executive harmless
from and against any claim, loss or cause of action arising from or out of
Executive’s good faith performance as an officer, director or employee of the
Company or any of its subsidiaries or in any other capacity, including any
fiduciary capacity, in which Executive serves at the request of the Company to
the maximum extent permitted by applicable law and the Company’s Restated
Certificate of Incorporation and By-Laws. Such obligations shall
include payment of all fees, costs and expenses, including attorney’s fees,
incurred as a result of such claim, loss or cause of action. The
Company shall also maintain D&O insurance for the benefit of Executive with
the same coverage, limits, terms and conditions as maintained for other
directors and officers of the Company from time to time, and such coverage shall
remain in effect for a period of six years following the end of the Employment
Period.
5. Termination of
Employment.
(a) Early Termination of the
Employment Period. Notwithstanding Section 1, the Employment
Period shall end upon the earliest to occur of (i) a termination of Executive’s
employment on account of Executive’s death, (ii) a termination due to
Executive’s Disability, (iii) Termination for Cause, (iv) a Termination Without
Cause, (v) a Termination for Good Reason, or (vi) a Termination Not for Good
Reason.
(b) Benefits Payable Upon Early
Termination. Following the end of the Employment Period
pursuant to Section 5(a), Executive (or, in the event of his death, his
surviving spouse, if any, or his estate) shall be paid the type or types of
compensation determined to be payable in accordance with the following table at
the times established pursuant to Section 5(c):
|
Earned
Salary
|
Vested
Benefits
|
Severance
Benefits
|
Additional
Benefits
|
|
|
Termination
due
to
death
|
Payable
|
Payable
|
Not
payable
|
Available
|
|
Termination
due
to
Disability
|
Payable
|
Payable
|
Not
payable
|
Available
|
|
Termination
for
Cause
|
Payable
|
Payable
|
Not
payable
|
Not
available
|
|
Termination
for
Good
Reason
|
Payable
|
Payable
|
Payable
|
Available
|
|
Termination
Without
Cause
|
Payable
|
Payable
|
Payable
|
Available
|
|
Termination
Not for Good Reason
|
Payable
|
Payable
|
Not
payable
|
Not
Available
|
In the
event that his employment terminates due to death, his widow will receive six
months’ Base Salary to be paid in a lump sum 10 days following the end of his
Employment Period.
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(c) Timing of
Payments. Earned Salary (as defined below) shall be paid in
cash in a single lump sum 10 days following the end of the Employment
Period. Vested Benefits shall be payable in accordance with the terms
of the plan, policy, practice, program, contract or agreement under which such
benefits have been awarded or accrued. Severance Benefits shall be
paid, subject to Section 10(o) below, (i) in the case of amounts other than
those set forth in clauses (i)(C), (i)(D), (ii)(B) and (ii)(C) of the definition
thereof, in a single lump sum cash payment sixty (60) days after the Executive’s
termination, (ii) in the case of amounts set forth in clauses (i)(C) and (ii)(B)
of the definition thereof, an estimate of such amounts shall be made by the
Company at the time of termination of employment and such estimate shall be paid
sixty (60) days after such termination of employment, and the actual amount
shall be determined at the time annual bonuses are determined for other
participants under the Annual Plan and any additional amount payable to
Executive shall be paid no later than March 15 of the year following
termination of employment and any excess amount paid to Executive over the
actual amount owing shall be paid by Executive to the Company no later than
March 15 of the year following termination of employment, and (iii) in
the case of amounts set forth in clauses (i)(D) and (ii)(C) of the definition
thereof, such amount shall be paid in fifteen (15) equal monthly installments of
$15,000 each, the first two of which shall, subject to Section 10(o) below,
be paid on the second monthly anniversary of the date of termination of
employment, and each of the next thirteen of such installments shall be paid
monthly commencing on the third monthly anniversary of the date of termination
of employment and continuing on each of the following twelve monthly
anniversaries thereof. Additional Benefits shall be provided or made
available at the times specified below as to each such Additional
Benefit.
(d) Definitions. For
purposes of Sections 5 and 6, capitalized terms have the following
meanings:
“Additional
Benefits” means, if Executive’s employment terminates due to death or in a
Termination due to Disability, the benefits described in subclauses (i), (iv)
and (v) below, or if the Executive’s employment is terminated in a Termination
Without Cause or a Termination for Good Reason, the benefits described in
subclauses (i), (ii), (iii) and (iv) below:
(i) All
of the Executive’s benefits accrued under any pension, retirement, savings and
deferred compensation plans of the Company shall become vested in full; provided, however, that to the
extent such accelerated vesting of benefits cannot be provided under one or more
of such plans consistent with applicable provisions of the Code, such benefits
shall be paid to Executive outside the applicable plan in a lump sum, subject to
Section 10(o) below, sixty (60) days after the date of termination of
employment; provided,
further, however, that, to the extent any such unvested benefit
constitutes deferred compensation for purposes of Section 409A of the Code, the
payment of such deferred compensation shall instead be made at the time it was
otherwise scheduled to be paid under the applicable plan;
(ii) Executive
(and, to the extent applicable, his dependents) will be entitled to continue
participation in all of the Company’s medical, dental and vision care plans (the
“Health Benefit Plans”), until the 24-month anniversary of the end of the
Employment Period; provided that Executive’s
participation in the Company’s Health Benefit Plans shall cease on any earlier
date that Executive be-
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comes
eligible for substantially similar benefits from a subsequent
employer. Executive’s participation in the Health Benefit Plans will
be on the same terms and conditions (including, without limitation, any
contributions that would have been required from Executive) that would have
applied had Executive continued to be employed by the Company. To the
extent any such benefits cannot be provided under the terms of the applicable
plan, policy or program, the Company shall provide a comparable benefit under
another plan or from the Company’s general assets. So long as
Executive has not become eligible for substantially similar health benefit
coverage from a subsequent employer, for the period beginning on the 24-month
anniversary of the end of Employment Period and ending on the earlier of the
date Executive is eligible for substantially similar health benefit coverage
from a subsequent employer or the date he becomes eligible for Medicare, the
Company will reimburse Executive’s premium cost for health benefit plan coverage
(to the extent such coverage is substantially similar to the coverage provided
from time to time under the Health Benefit Plans of the Company for senior
executives of the Company) up to a monthly amount equal to the sum of (i) the
monthly contribution the Company would have made toward the premium cost of such
coverage had Executive remained covered under the Company’s Health Benefit
Plans, and (ii) $417, and such reimbursement shall be made within thirty (30)
business days following presentment to the Company by Executive of a receipt for
such payment of such premiums by him;
(iii) In
the case of any options to purchase Company stock or other equity-based awards
granted to Executive by the Company, notwithstanding any provision in the
applicable award agreements to the contrary, such stock options or awards shall
become vested in full at the time of termination of Executive’s employment, and
any such stock options may be exercised until December 31, 2011 (but not beyond
the original full term of the option), and in the event Executive cannot
exercise any such stock options during a period of time after December 31, 2009
because such an exercise would violate an applicable federal, state, local or
foreign law, such stock options may be exercised until March 31, 2012 (but not
beyond the original full term of the option);
(iv) The
amount, if any, of Executive’s annual bonus earned, but unpaid, in accordance
with the terms of the Annual Plan for the calendar year immediately preceding
the year of termination of employment shall be paid, subject to Section 10(o)
below, to Executive on the date such annual bonus is paid to other participants
for such year in accordance with the terms of the Annual Plan; and
(v) An
amount equal to Executive’s Annual Target Bonus Opportunity for the year
of Termination due to death or Termination due to Disability prorated
on a daily basis through the date of termination of employment, paid, subject to
Section 10(o) below, in a single lump sum cash payment sixty (60) days
after Executive’s Termination due to death or Termination due to Disability, as
the case may be.
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“Disability”
means long-term disability within the meaning of the Company’s long-term
disability plan or program, or, in the absence of such a plan or program, as
defined in Section 22 of the Code.
“Earned
Salary” means any Base Salary earned, but unpaid, for services rendered to the
Company on or prior to the date on which the Employment Period ends pursuant to
Section 5(a) (other than Base Salary deferred pursuant to Executive’s election,
as provided in Section 3(a) of (b) hereof).
“Severance
Benefits” means an amount equal to (i) in the case of termination of the
Executive’s employment prior to January 1, 2009, the sum of (A) Executive’s
Base Salary from the end of the Employment Period through December 31,
2008, (B) two times Executive’s Base Salary (and no bonus for 2009 shall be
payable), (C) the amount of Executive’s annual bonus earned in accordance
with the terms of the Annual Plan for calendar year 2008 (but without any
requirement that he remain employed through the end of the year or the payment
date), which annual bonus shall not be less than 75% of his Base Salary for
2008, and (D) amount equal to $225,000, and (ii) if Executive’s
termination of employment occurs during calendar year 2009, the sum of
(A) the Executive’s Base Salary from the end of the Employment Period
through December 31, 2009, (B) the amount of Executive’s annual bonus
earned in accordance with the terms of the Annual Plan for calendar year 2009
(but without any requirement that he remain employed through the end of the year
or the payment date), which annual bonus shall not be less than 75% of his Base
Salary for 2009, and (C) amount equal to $225,000; provided, however, that
Severance Benefits and Additional Benefits shall not be payable under this
Agreement to the Executive if the termination of Executive’s employment results
in the payment of severance benefits under Executive’s Change in Control
Agreement with the Company dated of even date herewith.
“Termination
for Cause” means a termination of Executive’s employment by the Company due to
(i) Executive’s conviction of a felony, or (ii) any act of willful fraud,
dishonesty or moral turpitude.
“Termination
for Good Reason” means a termination of Executive’s employment by Executive
prior to December 31, 2009, within 90 days following, without Executive’s
written consent and subject to the timely notice requirement and the Company’s
opportunity to cure set forth below, (A) a change in Executive’s titles from
those described in Section 2 hereof (other than in connection with Executive
ceasing to serve as Chief Executive Officer of the Company and continuing as
Chairman, as set forth in Section 2 above), (B) the removal of Executive
from, or the failure to re-elect Executive as a member of, the Board, (C) a
reduction in Executive’s annual Base Salary (other than any reduction therein
which is in proportion to reductions in the base salaries of all of the
Company’s executive officers, as contemplated by Section 3(a) hereof, unless,
however, such proportionate reduction exceeds 20% of Executive’s Base Salary),
(D) the assignment by the Company to Executive of duties and
responsibilities that are materially inconsistent with his position as Chairman
and Chief Executive Officer of the Company or Chairman of the Company, as the
case may be (it being understood by the parties hereto that a material
diminution in Executive’s position, duties or responsibilities shall not
constitute “Good Reason” hereunder), (E) a material breach by the Company of any
other provision
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of this
Agreement, or (F) a failure by the Company to obtain the assumption of the
obligations contained in this Agreement by any successor as contemplated in
Section 10(d) below. It shall be a condition precedent to Executive’s
right to terminate employment for Good Reason that (i) Executive shall first
have given the Company written notice that an event or condition constituting
Good Reason has occurred and specifying in reasonable detail the circumstances
constituting such Good Reason within thirty (30) days after such occurrence, and
(ii) a period of thirty (30) days from and after the giving of such written
notice shall have elapsed without the Company having effectively cured or
remedied such occurrence during such 30-day period.
“Termination
Not for Good Reason” means a termination of Executive’s employment by Executive
(other than a Termination for Good Reason) by Executive providing at least sixty
(60) days’ advance written notice to the Company of the effective date of such
termination.
“Termination
Without Cause” means any termination of Executive’s employment by the Company
prior to December 31, 2009 other than a Termination for Cause, a
Termination on account of Executive’s death, or a Termination due to Executive’s
Disability.
“Vested
Benefits.” means amounts which are vested or which Executive is otherwise
entitled to receive under the terms of or in accordance with any plan, policy,
practice or program of, or any contract or agreement with, the Company or any of
its subsidiaries, at or subsequent to the end of the Employment Period without
regard to the performance by Executive of further services or the resolution of
a contingency.
(e) Full Discharge of Company
Obligations. Except as expressly provided in the last sentence
of this Section 5(e), the amounts payable to Executive pursuant to this Section
5 following termination of his employment (including amounts payable with
respect to Vested Benefits) shall be in full and complete satisfaction of
Executive’s rights under this Agreement and any other claims he may have in
respect of his employment by the Company or any of its
subsidiaries. Such amounts shall constitute liquidated damages with
respect to any and all such rights and claims and, upon Executive’s receipt of
such amounts, the Company shall be released and discharged from any and all
liability to Executive in connection with this Agreement or otherwise in
connection with Executive’s employment with the Company and its
subsidiaries. As prior conditions to the receipt of any Additional
Benefits and/or Severance Benefits payable pursuant to this Section 5,
(i) Executive shall have executed and delivered within fifty (50) days
after termination of his employment and shall not have revoked within the
statutory revocation period, a release of claims in form and substance
satisfactory to the Company (but not inconsistent with the terms of this
Agreement), and (ii) Executive shall have resigned from the Board and all
officer and director positions with the Company, its subsidiaries and
affiliates. Nothing in this Section 5(e) shall be construed to
release the Company from its commitment to indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action as
described in Section 4(d).
6. Noncompetition and
Confidentiality. By and in consideration of the Base Salary
and miscellaneous benefits to be provided by the Company hereunder, including
particularly the severance arrangements set forth herein, Executive agrees
that:
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(a) Noncompetition. Executive
acknowledges that the Company and its subsidiaries conduct business throughout
the United States and the District of Columbia and that his duties to Company
relate to some or all of these territories and to some or all business lines of
the Company. During the Employment Period and during the twenty-four
(24) month period following the end of the Employment Period, Executive shall
not, directly or indirectly, perform or provide any executive management or
business consulting services for a Competitive Business. For this
purpose, a “Competitive Business” means a corporation, firm or other enterprise
which (i) is in the home healthcare business on a national or regional
geographical basis and directly competes with any Company business that has at
least $25 million in annual revenue and (ii) has at least $25 million in annual
revenue in such business. Ownership for investment purposes of up to
5% of the capital stock of any such competing company shall not be deemed to be
in conflict with Executive’s obligations hereunder.
(b) Confidentiality. Except
as may be required by the lawful order of a court or agency of competent
jurisdiction, or applicable law, or except to the extent that Executive has
express authorization from the Company, Executive agrees to keep secret and
confidential indefinitely all non-public information (including, without
limitation, information regarding litigation and pending litigation and any
information that may be subject to attorney-client privilege) concerning the
Company, its subsidiaries and affiliates (collectively, the “Company Group”)
which was acquired by or disclosed to Executive during the course of Executive’s
employment with the Company, and not to disclose the same, either directly or
indirectly, to any other person, firm, or business entity, or to use it in any
way. Such non-public information shall include, but not be limited
to, the following:
(i) Confidential
and proprietary information which the Company Group has compiled to identify,
develop and service its clients and customers, including “negative research” to
identify those entities who have not subscribed to the services of the Company
and its subsidiaries;
(ii) information
which the Company Group has compiled concerning the operations of the clients
and customers of the Company and its subsidiaries, including key contacts within
the clients’ and customers’ business, familiarity with special needs and
customer characteristics, workers’ compensation information, billing rates,
profit margins, sales volumes, and other sensitive financial information;
and
(iii) information
which the Company Group has compiled concerning the employees and labor force at
the Company and its subsidiaries, including compilations of their names,
addresses, job skills, employment histories and employment records to the extent
such information constitutes a “trade secret” of the Company under applicable
law and is not otherwise readily available to the general public.
Upon
termination of Executive’s employment, Executive shall promptly deliver to the
Company all materials of a confidential nature relating to the business of the
Company and its subsidiaries and which are Executive’s possession or
control. To the extent that Executive obtained informa-
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tion on
behalf of the Company or any subsidiary or affiliate that may be subject to
attorney-client privilege, Executive shall take reasonable steps to maintain the
confidentiality of such information and to preserve such privilege.
(c) Non-Solicitation and
Non-Hire of Employees. During the Employment Period and the
twenty-four (24) month period following the end of the Employment Period,
Executive shall not directly or indirectly, for his own benefit or that of any
other person, hire or offer any employment in a similar field or business
association to any of the Company’s employees, agents or representatives or
suggest or in any way encourage, any of the Company’s employees, agents or
representatives to terminate their employment or business association with the
Company. For purposes of this subparagraph, the term “employees,
agents or representatives” includes only individuals who are or were employees,
agents or representatives of the Company during the six-month period ending at
the end of the Employment Period.
(d) Non-Solicitation of Clients
and Customers. During the Employment Period and the
twenty-four (24) month period following the end of the Employment Period,
Executive shall not, directly or indirectly, solicit for Executive’s own benefit
or the benefit of any other person any of the Company’s customers and/or clients
with a view to selling or providing any product or service competitive with any
product or service sold or provided or identified as a product that will be sold
or provided within the aforesaid twenty-four (24) month period by the
Company. For the purposes of this Section 6(d), the term “customers”
and/or clients shall include any person or entity to whom the Company has sold,
provided or been obligated to provide, any service or product, or who has
otherwise received any service or benefit from the Company within the last 24
months or within the 24-month period preceding the date Executive’s employment
terminates.
(e) Company
Property. Except as expressly provided herein, promptly
following the end of the Employment Period, Executive shall return to the
Company all property of the Company.
(f) Injunctive Relief and Other
Remedies with Respect to Covenants. Executive acknowledges and
agrees that the covenants and obligations of Executive with respect to
noncompetition, nonsolicitation, confidentiality and Company property, relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations may cause the Company irreparable injury
for which adequate remedies are not available at law. Therefore,
Executive agrees that the Company shall be entitled to seek an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) restraining Executive from committing any violation of the covenants
and obligations contained in this Section 6. This remedy is in
addition to any other rights and remedies the Company may have at law or in
equity.
7. Vesting of Equity
Awards. So long as Executive’s employment continues hereunder
through December 31, 2009, notwithstanding any provision in the applicable
award agreements to the contrary, (i) all options to purchase Company common
stock, restricted Company stock, deferred Company stock awards and other Company
equity-based compensation awards, to the extent outstanding and held by
Executive on December 31, 2009, will become vested in full on December 31,
2009, and any stock options held by the Executive may be exercised until
December 31, 2011 (but not beyond the original full term of the option), and
(ii) in the
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event
Executive cannot exercise any such stock options during a period of time after
December 31, 2009 because such an exercise would violate an applicable federal,
state, local or foreign law, such stock options may be exercised until March 31,
2012 (but not beyond the original full term of the option). In the
event either a Termination Without Cause or a Termination for Good Reason occurs
prior to December 31, 2009, clause (iii) under the definition of “Additional
Benefits” in Section 5(d) above will apply with respect to stock options and
other equity-based awards.
8. Consultancy
Period. In the event Executive’s employment continues
hereunder through December 31, 2009, Executive shall provide consulting
services to the Company during the period (the “Consultancy Period”) beginning
at the end of the Employment Period and ending fifteen (15) months
thereafter. Executive shall provide such consulting services to the
Company commensurate with his status and experience as the former Chairman and
Chief Executive Officer of the Company with respect to such matters as shall be
reasonably requested from time to time by the Company. Executive
shall also assist the Company in the transition in management of the Company and
provide such additional services as and when reasonably requested. In
no event shall Executive be required to render consulting services pursuant to
this Section 8 in excess of three (3) days per month. Following a
request by the Company, Executive and the Company shall mutually determine the
time and location at which he shall perform such services. So long as
Executive is in compliance with the provisions of this Section 8 and
Section 6 above, the Company shall pay Executive $15,000 per month for such
consulting services, to be paid, subject to Section 10(o) below, on the
last business day of each month during the Consultancy Period, and each such
monthly payment shall be deemed to be a separate payment for purposes of Section
409A. Executive shall not, by virtue of the consulting services
provided hereunder, be considered an officer or employee of the Company, and
shall have no power or authority to contract in the name of or bind the
Company. Executive shall not be entitled to any employee benefits or
other compensation by virtue thereof, except as expressly provided in this
Section 8. So long as Executive’s employment continues hereunder
through December 31, 2009, the Company shall provide an office and
part-time secretarial support for Executive during the Consultancy
Period. The provisions of this Section 8 shall not apply if the
termination of Executive’s employment results in the payment of severance
benefits under Executive’s Change in Control Agreement with the Company dated of
even date herewith. If, during the Consultancy Period, Executive
becomes significantly involved in strategic planning for the Company or its
subsidiaries, the parties hereto will discuss in good faith the extension of the
term of the non-solicitation provisions set forth in Sections 6(c) and 6(d) of
this Agreement.
9. Medical
Benefits. So long as Executive’s employment continues
hereunder through December 31, 2009, Executive will receive the benefits
set forth in this Section 9. Executive (and, to the extent
applicable, his dependents) will be entitled to continue participation in all of
the Company’s Health Benefit Plans, until the 18-month anniversary of the end of
the Employment Period; provided that Executive’s
participation in the Company’s Health Benefit Plans shall cease on any earlier
date that Executive becomes eligible for substantially similar health benefit
coverage from a subsequent employer. Executive will make a COBRA
coverage election to participate in the Health Benefit Plans, effective from
January 1, 2010, and his participation will be on the same terms and conditions
(including, without limitation, any contributions that would have been required
from Executive) that would have applied had Executive continued to be employed
by the Company. For the period beginning on such 18-month anniversary
and ending on the earlier of the date Executive is eligible for substantially
similar health benefit coverage from a subsequent employer or the date he
becomes eligible for Medicare, the Com-
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pany will
reimburse Executive’s premium cost for health benefit plan coverage (to the
extent such coverage is substantially similar to the coverage provided from time
to time under the Health Benefit Plans of the Company for senior executives of
the Company) up to a monthly amount equal to the sum of (i) the monthly
contribution the Company would have made toward the premium cost of such
coverage had Executive remained covered under the Company’s Health Benefit
Plans, and (ii) $417, and such reimbursement shall be made within thirty (30)
business days following presentment to the Company by Executive of a receipt for
such payment of such premiums by him. The provisions of this Section
9 shall not apply if the termination of Executive’s employment results in the
payment of severance benefits under Executive’s Change in Control Agreement with
the Company dated of even date herewith.
10. Miscellaneous.
(a) Effective
Date. This Agreement shall become effective for all purposes
on the date set forth in the first paragraph of this Agreement above (the
“Effective Date”).
(b) Survival. Sections
4(d) relating to indemnification, 5 (relating to early termination), 6 (relating
to noncompetition, nonsolicitation and confidentiality), 7 (relating to vesting
of equity awards), 8 (relating to the Consultancy Period), 9 (relating to
medical benefits), 10(c) (relating to arbitration), 10(d) (relating
to binding effect) and 10(n) (relating to governing law) shall survive the
termination hereof.
(c) Arbitration. Any
dispute or controversy arising under or in connection with this Agreement shall
be resolved by binding arbitration. This arbitration shall be held in
New York City and except to the extent inconsistent with this Agreement, shall
be conducted in accordance with the Expedited Employment Arbitration Rules of
the American Arbitration Association then in effect at the time of the
arbitration, and otherwise in accordance with principles which would be applied
by a court of law or equity. Executive and the Company shall be
entitled to discovery in any such proceeding. All fees, costs and
expenses of the arbitration, with the exception of Executive’s attorney’s fees,
costs and expenses, shall be borne by the Company. The arbitrator
shall be acceptable to both the Company and Executive. If the parties
cannot agree on an acceptable arbitrator, the dispute shall he held by a panel
of three arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators. The arbitrator(s) shall not
have the power to commit substantive errors of law, legal reasoning or fact,
shall set forth their factual and legal reasoning in any award or determination,
and any such award or determination may be vacated or corrected as a
result.
(d) Binding
Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the Company and any person or entity that succeeds to the
interest of the Company (regardless of whether such succession does or does not
occur by operation of law) by reason of the sale of all or a portion of the
Company’s stock, a merger, consolidation or reorganization involving the Company
or a sale of all or substantially all of the assets of the
Company. The Company will require any such successor to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. This Agreement shall also inure to the benefit of Executive’s
heirs, executors, administrators and legal representatives.
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(e) Assignment. Except
as provided under Section 10(d), neither this Agreement nor any of the rights or
obligations hereunder shall be assigned or delegated by any party hereto without
the prior written consent of the other party.
(f) Entire
Agreement. This Agreement, together with the Change in Control
Agreement between the Company and the Executive of even date herewith,
constitutes the entire agreement between the parties hereto with respect to the
matters referred to herein. No other agreement (other than awards
made in accordance with the terms of one of the Company’s applicable
compensatory plans, programs or arrangements) relating to the terms of
Executive’s employment by the Company, oral or otherwise, including, without
limitation, the Severance Letter dated March 14, 2000, the Employment Agreements
dated as of June 10, 2002 and March 22, 2004, and the Change in Control
Agreements dated March 15, 2000, June 14, 2002 and March 22, 2004, between the
Executive and the Company, shall be binding between the parties. The
Company and the Executive acknowledge that both parties have signed or will sign
contemporaneously with this Agreement a new and separate Change in Control
Agreement, and that the terms of such Change in Control Agreement are not
superseded by this Agreement and may be enforced notwithstanding any terms of
this Agreement to the contrary. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he
is entering into this Agreement of his own free will and accord, and with no
duress, that he has read this Agreement and that he understands it and its legal
consequences. It is intended by the parties hereto that there shall
not be a duplication of benefit payments under this Agreement and the Change in
Control Agreement between the Company and the Executive of even date
herewith.
(g) Severability;
Reformation. In the event that one or more of the provisions
of this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby. In the event that any of the
provisions of Section 6 hereof are not enforceable in accordance with their
terms, Executive and the Company agree that such provisions shall be reformed to
make such Section enforceable in a manner which provides the Company the maximum
rights permitted at law.
(h) Waiver. Waiver
by any party hereto of any breach or default by the other party of any of the
terms of this Agreement shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or default
waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
(i) Notices. Any
notice required or desired to be delivered under this Agreement shall be in
writing and shall be delivered personally, by courier service, by certified
mail, return receipt requested, or by telecopy and shall be effective upon
actual receipt by the party to which such notice shall be directed, and shall be
addressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
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If to the
Company:
|
Gentiva
Health Services, Inc.
0
Xxxxxxxxxx Xxxxxxxxxx 0X
Xxxxxxxx,
XX 00000
Attention: General
Counsel
|
If to
Executive:
To the
last address of Executive on record with the Company
(j) Amendments. This
Agreement may not be altered, modified or amended except by a written instrument
signed by each of the parties hereto.
(k) Headings. Headings
to paragraphs in this Agreement are for the convenience of the parties only and
are not intended to be part of or to affect the meaning or interpretation
hereof.
(l) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
instrument.
(m) Withholding. Any
payments provided for herein shall be reduced by any amounts required to be
withheld by the Company from time to time under applicable Federal, State or
local income tax laws or similar statutes then in effect.
(n) Choice of
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws thereof.
(o) Section
409A. It is intended that this Agreement will comply with
Section 409A of the Code (and any regulations and guidelines issued thereunder)
to the extent the Agreement is subject thereto, and the Agreement shall be
interpreted on a basis consistent with such intent. If an amendment
of the Agreement is necessary in order for it to comply with Section 409A, the
parties hereto will negotiate in good faith to amend the Agreement in a manner
that preserves the original intent of the parties to the extent reasonably
possible. Notwithstanding any provision to the contrary in this
Agreement, if Executive is deemed on the date of his “separation from service”
(within the meaning of Treas. Reg. Section 1.409A-1(h)) to be a “specified
employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then
with regard to any payment that is required to be delayed pursuant to Section
409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier
of (i) the expiration of the six (6)-month period measured from the date of his
“separation from service,” or (ii) the date of his death (the “Delay
Period”). Upon the expiration of the Delay Period, all payments
delayed pursuant to this Section 10(o) (whether they would have otherwise been
payable in a single sum or in installments in the absence of such delay) shall
be paid to Executive in a lump sum together with interest at 1% above the prime
rate (as reported in The Wall Street Journal, Eastern Edition), as in effect on
the first day of the Delay Period, and any remaining payments due under this
Agreement shall be paid in accordance with the normal payment dates specified
for them herein. Notwithstanding any provision of this Agreement to
the contrary, for purposes of Sections 5 and 8
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above,
Executive’s employment will be deemed to have terminated and the Employment
Period will be deemed to have ended on the date of Executive’s “separation from
service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the
Company. No action or failure to act, pursuant to this Section 10(o)
shall subject the Company to any claim, liability, or expense, and the Company
shall not have any obligation to indemnify or otherwise protect Executive from
the obligation to pay any taxes, interest or penalties pursuant to Section 409A
of the Code. With respect to any reimbursement or in-kind benefit
arrangements of the Company and its subsidiaries that constitute deferred
compensation for purposes of Section 409A of the Code, the following
conditions shall be applicable: (i) the amount eligible for reimbursement,
or in-kind benefits provided, under any such arrangement in one calendar year
may not affect the amount eligible for reimbursement, or in-kind benefits to be
provided, under such arrangement in any other calendar year (except that the
health and dental plans may impose a limit on the amount that may be reimbursed
or paid if such limit is imposed on all participants), (ii) any
reimbursement must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred, and (iii) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit. Whenever payments under this Agreement
are to be made in installments, each such installment shall be deemed to be a
separate payment for purposes of Section 409A.
(p) Attorneys
Fees. The Company shall reimburse Executive for the reasonable
legal fees and expenses incurred by him in connection with negotiation of this
Agreement and negotiation of the Change in Control Agreement with the Company
executed on even date herewith.
(q) No Duty to
Mitigate. Executive shall have no duty to seek new employment
or other duty to mitigate following a termination of employment, and, except in
the case of health care benefits as provided herein, no compensation or benefits
described in this Agreement shall be subject to reduction or offset on account
of any compensation or benefits earned or provided by a subsequent
employer.
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IN
WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents
to be executed as of the day and year first above written.
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GENTIVA
HEALTH SERVICES, INC.
|
|
By:
/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chair, Compensation Committee
|
| By: /s/ Xxxxxx X. Xxxxxx |
|
Name: Xxxxxx X. Xxxxxx
Title: Chief Exeuctive Officer and
Chairman of the Board
|
|
|
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