EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") is entered into as of April 7,
1998, by and between XXXXXX RESPIRATORY CARE INC., a California corporation
("Company"), and Xxxxx X. Xxxxxx ("Employee") (with Company and Employee
sometimes being referred to herein individually as a "party" and collectively as
the "parties").
R E C I T A L S:
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WHEREAS, Employee currently is an employee of Company; and
WHEREAS, the parties desire to provide for Company's continued
employment of Employee pursuant to the terms and provisions of this Agreement
commencing as of April 7, 1998 (the "Effective Date").
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I. SERVICES AND COMPENSATION.
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1.1. Employment of Employee. The parties hereby acknowledge that
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prior to the Effective Date Employee has been employed by Company. Commencing
as of the Effective Date, Company agrees to employ Employee and Employee agrees
to be employed by Company pursuant and subject to the terms and provisions of
this Agreement. Employee agrees to serve Company faithfully and to the best of
his/her ability in such capacity or capacities and with such duties and
responsibilities as may be determined by Company from time to time. Employee
shall devote such his or her full time and attention to the business of Company
during the term of this Agreement. Employee shall not, while employed by
Company, directly or indirectly render any services of a business, commercial or
professional nature to any other person or organization, whether for
compensation or otherwise.
1.2. Compensation.
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(a) As compensation for Employee's performance of his/her services
under this Agreement, Company shall pay Employee an annual base salary in
an amount as may be determined and adjusted by Company in its discretion
from time to time. Such compensation shall be prorated for a partial year
based on the number of days worked for Company during such year, and shall
be payable in accordance with Company's customary
employee payroll practices, including but not limited to all customary
withholding practices.
(b) As additional compensation for Employee's performance of his/her
services under this Agreement, Company may pay Employee a cash bonus
pursuant to Company's management incentive programs as in effect from time
to time, provided, however, that Company shall have no obligation to pay
any such bonus to Employee, and the amount of any such bonus, if paid,
shall be entirely discretionary. Employee's eligibility to receive any
such bonus for any year is expressly conditioned upon Employee being
employed by Company as of December 31 of such year. The cash bonus (if
any) payable to Employee pursuant to this subsection (b) with respect to
any calendar year shall be paid in one lump sum on or before March 15 of
the immediately succeeding calendar year.
(c) By agreeing hereunder to pay Employee an annual salary Company is
not agreeing to employ Employee for any specified term or to pay Employee,
upon the termination of his/her employment, any amounts other than those
set forth in Section 1.4 hereof. Company may in its sole discretion adjust
Employee's compensation as it deems appropriate from time to time,
provided, however, that any such adjustment shall apply prospectively only
to years following notification to Employee of such adjustment. Without
limitation upon said discretion of Company, such compensation adjustments
may be made to reflect (i) any changes in Employee's employment position or
responsibilities, (ii) Company's evaluation of Employee's job performance,
and/or (iii) the nature and/or profitability of Company's business
activities. Nothing contained herein shall be deemed contrary to
Employee's right to effect a Qualifying Resignation under circumstances to
which the provisions of Section 1.4(c)(iii) hereof apply.
1.3. Fringe Benefits.
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(a) Employee shall be entitled to participate in all health, welfare,
insurance, pension and other similar employee benefit plans and programs of
Company which are open to participation by employees holding employment
positions comparable to Employee's position; provided, however, that such
participation by Employee shall in all cases be subject to the terms and
provisions of each such employee plan or program and also to applicable
federal, state or other governmental laws and regulations.
(b) Employee's eligibility for the use of a Company automobile or to
payment of an automobile allowance from Company, and the terms of such
automobile use or allowance, shall be determined from time to time by
Company in its discretion in accordance with its periodic review of all
elements of its management compensation arrangements.
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1.4. Termination of Employment; Severance Pay.
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(a) The parties hereby expressly agree that Employee's employment by
Company may be terminated by either party at any time and for any reason,
whether with or without cause.
(b) Except as provided in subsection (c) hereinbelow, if Employee's
employment with Company is involuntarily terminated by Company, or if
Employee resigns pursuant to a Qualifying Resignation (as defined
hereinbelow), then, Company shall pay to Employee a severance payment equal
to 12 months' base salary determined at the rate in effect as of the date
of employment termination ("Severance Payment"). Employee's Severance
Payment shall be paid on a monthly basis over the 12 month period following
Employee's termination of employment. If Employee shall be reemployed by
another employer within 12 months following Employee's termination of
employment with Company, Employee's Severance Payment hereunder shall be
reduced by the amount of monthly base compensation which Employee shall
earn pursuant to such other employment during said 12 month period.
Employee shall be obligated (A) to exercise good-faith efforts to obtain
such other employment, and (B) to provide Company with adequate
verification of the amount of compensation which Employee will earn
pursuant to such other employment.
(c) Notwithstanding the foregoing, Employee shall not be entitled to
any Severance Payment in the event of the termination of Employee's
employment with Company by reason of any one or more of the following: (I)
Cause, as defined hereinbelow; (ii) Employee's death or Permanent
Disability, as defined hereinbelow; or (iii) Employee's resignation, other
than a Qualifying Resignation, as defined hereinbelow. As used herein, the
following terms shall have the meanings set forth hereinbelow:
(i) "Cause" shall mean (i) Employee's conviction of, or the
entry of a pleading of guilty or nolo contendre by Employee to, a
felony or a crime involving moral turpitude, (ii) Employee's material
failure to perform his duties required under his employment
relationship, material failure to comply with the Company's, its
Parent's and/or any subsidiary's standard policies and procedures
generally applicable to employees, or failure to comply with any
provision of this employment agreement after having received written
notice from the Company, its Parent and/or a subsidiary identifying
such failure and after having received an opportunity of at least ten
(10) days in which to cure the failure so identified by the Company,
its Parent and/or a subsidiary if such failure is susceptible to cure,
(iii) a willful act by Employee as a result of which he receives an
improper personal benefit at the expense of the Company, its Parent
and/or a subsidiary, (iv) an act of fraud or dishonesty committed by
Employee against the Company, its Parent and/or a subsidiary, or (v)
any other misconduct by Employee that is materially
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injurious to the business or reputation of the Company, its Parent
and/or a subsidiary. "Parent" means River Holding Corp.
(ii) "Permanent Disability" shall mean a disability which
qualifies Employee for disability payments under Company's long-term
disability plan.
(iii) "Qualifying Resignation" shall mean a resignation by
Employee within 60 days after any of the following: (A) a change of
Employee's duties and responsibilities which cause Employee's position
to be one of materially lesser responsibility and scope; or (B) a
reduction in Employee's base salary.
(d) The payment of any Severance Payment as provided under this
Section 1.4 shall be subject to Company's usual and customary employee
payroll practices and also subject to all applicable withholding
requirements. Except for such Severance Payment, Employee shall not be
entitled to any further compensation or other severance benefits by reason
of a termination of his/her employment with Company.
ARTICLE II. PROHIBITED ACTIVITIES; CONFIDENTIAL INFORMATION; NONDISCLOSURE,
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NONINTERFERENCE AND NONSOLICITATION COVENANTS.
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2.1. Prohibited Activity. As used herein the term "Prohibited
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Activity" means (a) the direct or indirect diversion of business to, or
solicitation of business for or on behalf of, any person, firm, corporation or
other entity which is a competitor of Company, and (b) solicitation or
inducement of any employee of Company to terminate his/her relationship with
Company for the purpose of becoming employed by or associated with a competitor
of Company. Employee hereby agrees that during the term of his/her employment
with Company he/she will not engage in any Prohibited Activity.
2.2. Confidential Information: Nondisclosure Covenant.
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(a) As used herein the term "Confidential Information" shall mean
all customer and contract lists, records, financial data, trade secrets,
business and marketing plans and studies, manuals for employee and
personnel policies, manufacturing and/or production manuals, computer
programs and software, strategic plans, formulas, manufacturing and
production processes and techniques (including without limitation types of
machinery and equipment used together with improvements and modifications
thereon), tools, applications for patents, designs, models, patterns,
drawings, tracings, sketches, blueprints, and all other similar information
developed and/or used by Company in the course of its business and which is
not known by or readily available to the general public.
(b) Employee acknowledges that, in the course of performing services
for and on behalf of Company, Employee has had and will continue to have
access to Confidential Information. Employee hereby covenants and agrees
to maintain in strictest confidence
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all Confidential Information in trust for Company, its successors and
assigns. During the period of Employee's employment with Company and at any
and all times following Employee's termination of employment for any
reason, including without limitation Employee's voluntary resignation or
involuntary termination with or without cause, Employee agrees to not
misappropriate, or disclose or make available to anyone outside Company's
organization, any Confidential Information or anything relating thereto
without the prior written consent of Company, which consent may be withheld
by Company for any reason or no reason at all.
(c) Upon Employee's termination of his/her employment with Company for
any reason, including without limitation Employee's voluntary resignation
or involuntary termination with or without cause, Employee hereby agrees to
promptly return to Company's possession all copies of any writings,
drawings or other information relating to Confidential Information which
are in Employee's possession or control. Employee further agrees that,
upon the request of Company at any time during Employee's period of
employment with Company, Employee shall promptly return to Company all such
copies of writings, drawings or other information relating to Confidential
Information which are in Employee's possession or control.
(d) Employee hereby assigns to Company all right, title and interest
in and to any ideas, inventions, original works or authorship,
developments, improvements or trade secrets which Employee solely or
jointly has conceived or reduced to practice, or will conceive or reduce to
practice, or cause to be conceived or reduced to practice, during his/her
employment with Company. All original works of authorship which are made
by Employee (solely or jointly with others) within the scope of Employee's
services hereunder and which are protectable by copyright are "works made
for hire," as that term is defined in the United States Copyright Act.
2.3. Noninterference and Nonsolicitation Covenants. In further
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reflection of Company's important interests in its proprietary information and
trade and employee relationships, Employee agrees that, during the 12-month
period following the termination of Employee's employment with Company for any
reason, including without limitation Employee's voluntary resignation or
involuntary termination with or without cause, Employee will not do any of the
following without the prior written consent of Company:
(a) directly or indirectly, for or on behalf of any person, firm,
corporation or other entity, interfere with any contractual or other
business relationship that Company has with any of its customers, clients,
service providers or materials suppliers as of the date of Employee's
termination of employment; or
(b) directly or indirectly solicit or induce any employee of Company
to terminate his/her employment relationship with Company.
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2.4. Severance Payment Forfeiture for Breach. If Employee at any time
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breaches his/her covenants or obligations under the foregoing provisions of
Sections 2.1, 2.2 and/or 2.3, Employee shall forfeit any remaining Severance
Payments otherwise payable to Employee under this Agreement.
2.5. Injunctive Remedy. In the case of any breach or threatened
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breach by Employee of any of his/her covenants or obligations under Sections
2.1, 2.2 and/or 2.3, the parties hereto agree that damages may not be an
adequate remedy for Company and that, in the event of any such breach or
threatened breach, the Company may, either with or without pursuing any
potential damage remedies, immediately obtain and enforce an injunction
prohibiting Employee from committing or continuing to commit such breach or
threatened breach.
ARTICLE III. MISCELLANEOUS
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3.1. Notices. All notices, requests, or other communications
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(hereinafter collectively referred to as "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and may be personally delivered, or may be deposited in the United
States mail, postage prepaid and addressed as follows:
To Company at: Xxxxxx Respiratory Care Inc.
00000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
To Employee at: Employee's current residential mailing address as
reflected in Company's employee records
A Notice which is delivered personally shall be deemed given as of the date of
personal delivery, and a Notice mailed as provided herein shall be deemed given
on the second business day following the date so mailed. Either party may
change its address for purposes of Notices hereunder pursuant to a Notice, given
as provided herein, advising the other party of such change.
3.2. Effective Date. Employee and Company understand and
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acknowledge that, as of the date of execution of this Agreement, Employee is an
employee of Company. Employee and Company agree, however, that the employment
relationship between Employee and Company shall be governed in all respects by
the terms and provisions of this agreement effective as of April 7, 1998.
3.3. Governing Law. This Agreement shall be governed by,
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interpreted under, and construed and enforced in accordance with the laws of the
State of California applicable to Agreements made and to be performed only
within the State of California.
3.4. Entire Agreement. The terms of this Agreement are intended by
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the parties as a final expression of their agreement with respect to such terms
as are included in this Agreement and may not be contradicted by evidence of any
prior or contemporaneous agreement.
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The parties further intend that this Agreement constitutes the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced into any judicial proceeding, if any, involving this Agreement,
except for written modifications as provided under Section 3.5 hereof. The
parties agree that there are no collateral agreements of any kind concerning
Employee's employment with Company. The parties further agree that any and all
prior employment agreements and agreements relating to the Company's former
Equity Participation Plan by and between the parties are hereby revoked and
superseded in their entirety by the provisions of this Agreement.
3.5. Modifications and Amendments. This Agreement may not be
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amended, modified, changed or supplemented, nor may any obligations hereunder be
waived, except by written instrument signed by both parties.
3.6. Successors and Assigns. This Agreement and the provisions
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hereof shall be binding upon each of the parties, their successors, assigns
and/or heirs.
3.7. Assignment. Employee's rights, duties, and obligations under
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this Agreement may not be assigned by Employee without the prior written consent
of Company. In connection with any sale, transfer or other disposition of all
or any part of Company's business, Company may assign to the transferee
Company's rights, duties and obligations under this Agreement.
3.8. Third Party Rights. The parties do not intend to confer any
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benefit hereunder on any person, firm or corporation other than the parties
hereto.
3.9. Non-Waiver of Rights. The failure or delay of either party in
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the exercise of any right given to such party hereunder shall not constitute a
waiver of rights unless the time specified herein for exercise of such rights
has expired, nor shall any single or partial exercise of any right preclude the
other or further exercise thereof or of any other right.
3.10. Partial Invalidity. If any provision of this Agreement is found
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to be invalid or otherwise unenforceable by any court or other tribunal of
competent jurisdiction, the invalidity or unenforceability of such provision
shall not affect the validity and enforceability of the remaining provisions
hereof.
3.11. Pronouns and Plurals. Wherever the context may require, any
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pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
3.12. Counterparts. This Agreement may be executed in two
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counterparts, each of which may be deemed an original, but both of which
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as provided hereinabove.
"COMPANY"
XXXXXX RESPIRATORY CARE INC.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
"EMPLOYEE"
By: /s/ Xxxxx X. Xxxxxx
________________________________________
Xxxxx X. Xxxxxx
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