Exhibit 10.12
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made and entered into this 1st day of November, 2002,
by and between Rotech Healthcare Inc., a Delaware corporation (together with its
successors and assigns, the "Company"), and Xxxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive and to enter into
an agreement embodying the terms of such employment (this "Agreement"), and the
Executive desires to accept such employment and enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for other good and valuable consideration, the Company and
the Executive (the "parties"), hereby agree as follows:
1 Employment; Duties; Acceptance and Term
1.1 The Company hereby employs the Executive as President and Chief
Executive Officer ("CEO") and the Executive agrees to be so employed
during the Employment Period (as defined in Section 1.4 hereof), and as
such the Executive shall report directly to the Board of Directors of
the Company (the "Board").
1.2 During the Employment Period (as defined in Section 1.4 hereof), the
Executive will be responsible for (a) managing the business and affairs
of the Company, (b) the day-to-day operations of the Company, (c) all
personnel related decisions, including but not limited to, employee
hiring and terminations and retention of consultants or other
contractors, and (d) such other or changed responsibilities as shall be
determined from time to time by the Board. All staff in the Company's
offices are expected to report to the Executive through their managers
or as otherwise determined by the Board. In addition, with the approval
of the Board, the Executive shall serve on the boards of directors and
hold executive positions at certain other subsidiary and affiliated
companies of the Company (each such related entity referred to
individually as a "Group Affiliate"). The Executive shall take all such
actions as may be required to fulfill his duties as President and CEO or
which may be necessary to carry out any additional responsibilities as
may be given to the Executive by the Board, including responsibilities
concerning or related to Group Affiliates.
1.3 The Executive shall devote his full business time and attention to the
business of the Company, including such additional duties and
responsibilities to which he is assigned by the Board, during the
Employment Period and shall not, during such period, be engaged in any
other business activity, whether or not such business activity is
pursued for gain, profit or other pecuniary or non-pecuniary advantage,
without the prior written and informed consent of the Board.
Notwithstanding the above, the Executive may (a) serve on the boards of
directors of charitable or other organizations and companies not
competing with
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the Company or any Group Affiliate or as an unpaid officer of a
charitable organization, (b) manage his own personal investments and
affairs, and (c) continue to serve as a director of Mazelle; provided,
however, that such activities do not interfere with the execution of
the Executive's duties hereunder, do not otherwise violate any
provision of this Agreement or otherwise conflict in any way with the
business of the Company or any Group Affiliate. The Executive shall not
accept, directly or indirectly, any compensation, remuneration or other
thing of value from any individual or entity which has or may have the
prospect of a business relationship with the Company or any Group
Affiliate, other than a gift of immaterial value, without the prior
written and informed consent of the Board.
1.4 Unless earlier terminated pursuant to Section 3 of this Agreement, the
Executive's employment with the Company under this Agreement shall be
for an initial term of four (4) years, commencing no later than December
9, 2002 and continuing until the four (4) year anniversary of the actual
date the Executive commences his employment (the "Initial Employment
Period"). The term of the Executive's employment under this Agreement
shall be automatically renewed for additional one-year terms (each a
"Renewal Period") upon the expiration of the Initial Employment Period
or any Renewal Period unless the Company or the Executive delivers to
the other, at least one hundred and eighty (180) days prior to the
expiration of the Initial Employment Period or the then current Renewal
Period, as the case may be, a written notice specifying that the term of
the Executive's employment will not be renewed at the end of the Initial
Employment Period or such Renewal Period, as the case may be. The period
from the actual date the Executive commences his employment with the
Company until the fourth anniversary of said date or, in the event that
the Executive's employment hereunder is earlier terminated as provided
in Section 3 hereof or renewed as provided in this Section 1.4, such
shorter or longer period, as the case may be, is hereinafter called the
"Employment Period".
1.5 The Executive acknowledges and agrees that he shall be required to
observe all lawful rules and policies of the Company.
1.6 The Executive agrees that he shall not knowingly participate in any
activity that is detrimental to the interests of the Company, interferes
with the performance of his duties hereunder or otherwise constitutes a
conflict of interest.
1.7 The Executive acknowledges that the Company and its Board will encourage
the Executive to purchase at least 100,000 shares of Rotech Healthcare
common stock in the open market no later than the six (6) month
anniversary of the commencement of the Executive's employment; provided,
however, that such purchase or purchases of shares shall comply with all
internal Company policies, including, but not limited to, policies
concerning the purchase or sale of Company securities, and any
applicable securities laws.
1.8 The Executive's primary location of employment shall be at the Company's
corporate headquarters located in Orlando, Florida.
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2 Compensation and Benefits
2.1 During the Employment Period and in consideration of the services
performed by the Executive for the Company, the Company will pay to the
Executive a Base Salary at an annual rate of Seven Hundred Thousand U.S.
Dollars ($700,000.00), subject to applicable payroll withholdings and
deductions, to be paid in substantially equal installments pursuant to
the Company's standard payroll practice (such salary, as increased from
time to time, being the "Base Salary"). The Executive's Base Salary
shall be reviewed by the Board or the compensation committee thereof
(the "Compensation Committee") a minimum of one time each year
commencing on the one year anniversary of the Commencement Date.
2.2 In addition to Base Salary, the Executive shall be eligible to receive
an annual bonus targeted at one hundred percent (100%) of his Base
Salary ("Target Bonus"). The Board and/or the Compensation Committee, at
its or their discretion, in conjunction with non-binding consultation
with the Executive, shall determine the exact amount of such bonus, if
any, based on Company and individual performance goals, criteria and
targets established by the Board and/or the Compensation Committee,
which terms shall be disclosed to the Executive in writing within one
hundred and twenty (120) days of the Effective Date (as defined below)
of this Agreement and thereafter on an annual basis. The annual
incentive bonus provided for in this Section 2.2 may exceed the Target
Bonus if the Board and/or the Compensation Committee determine(s) that
the Executive and the Company's performance exceeded the targeted
levels. Such Target Bonus shall be payable within ninety (90) days of
the close of each calendar year during the Employment Period. The Board
and/or the Compensation Committee shall review the Target Bonus and
related terms on an annual basis and may increase (but not decrease) the
Target Bonus.
2.3 The Company shall pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by him during the period of his
employment hereunder in the performance of his services under this
Agreement, upon timely presentation of expense statements or vouchers or
such other supporting information as the Company may require.
2.4 The Company shall purchase the Executive's Mercedes Benz automobile at
book value as determined by GECC Fleet Services, the Company's leasing
vendor. Following the purchase, the Executive will be entitled to use of
the vehicle during the Employment Term and the Company shall reimburse
the Executive for all normal and customary expenses associated with the
operation of such automobile (e.g., insurance, gasoline and
maintenance).
2.5 The Company shall provide to the Executive medical and disability
benefits and insurances and coverage under applicable employee benefit
plans provided generally to senior executives of the Company, including,
but not limited to, life insurance, accident, medical, dental,
disability and retirement plans and programs, pursuant to the terms,
conditions and limitations of the Company's plans and its regulations
then in effect and as they may be modified from time to time; provided,
however, that because the terms of the Executive's severance package is
covered by this Agreement, he is not eligible to participate in or for
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coverage under any Company separation, severance or change of control
plan, policy or benefit or similar program, unless such program or
policy explicitly states that it will apply to the Executive without
limitation under this Section 2.5 of the Agreement.
2.6 The Executive shall be entitled to non-cumulative paid vacation in the
amount of four (4) weeks of paid vacation per calendar year. No more
than two (2) weeks of accrued but unused vacation in each calendar year
shall be carried forward to the next year; provided, however, that at no
time during the Employment Period, regardless of the amount of vacation
accrued by the Executive, shall the Executive be entitled to take more
than six (6) weeks of vacation in any single calendar year. The
Executive shall not be entitled to receive a payment for any accrued but
unused vacation unless and except as expressly set forth in this
Agreement. The Executive will schedule his vacations subject to the
operating needs of the Company.
2.7 The Board has approved and the Executive shall be issued pursuant to an
agreement (the "Stock Option Agreement") a stock option to purchase
750,000 shares of the Company's common stock, $0.01 par value per share
(the "Options"), pursuant to the Rotech Healthcare Inc. 2002 Stock
Option Plan (the "Plan").
(a) Vesting; Exercisability. The Options shall vest (and thereby become
exercisable) over a period of four (4) years pursuant to the terms of
the Stock Option Agreement and the Plan; provided, however, that, on the
first anniversary of the Effective Date of this Agreement, 150,000 of
the Options may be cancelled by the Board of Directors of the Company in
its reasonable discretion based upon performance.
(b) Change of Control. In the event of a Change of Control, the Options
shall immediately become fully vested and exercisable. For purposes of
this Agreement, a "Change of Control" shall be deemed to have occurred
if, after the Effective Date of this Agreement, there shall have
occurred any of the following: (i) any "person," as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
Group Affiliate, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company, acquires beneficial ownership
(as defined under Section 13(d) of the Exchange Act) of voting
securities of the Company and immediately thereafter is a "50%
Beneficial Owner." For purposes of this provision, a "50% Beneficial
Owner" shall mean a person who is the "beneficial owner" (as defined
under Section 13(d) of the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50% of the combined
voting power of the Company's then-outstanding voting securities;
provided, however, that the term "50% Beneficial Owner" shall not
include any person who was a
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beneficial owner of outstanding voting securities of the Company at the
Effective Date (an "Existing Shareholder"), including any group that may
be formed which is comprised solely of Existing Shareholders or any
affiliate of an Existing Shareholder to whom voting securities may be
transferred if and for so long as the Existing Shareholder remains an
indirect beneficial owner of the voting securities following such
transfer, unless and until such time after the Effective Date as any
such Existing Shareholder shall have acquired beneficial ownership
(other than by means of a stock dividend, stock split, gift, inheritance
or receipt of securities in compensation for individual services as a
director or officer of the Company) of any additional voting securities
of the Company; (ii) during any period of two (2) consecutive years
commencing on or after the Effective Date, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a "person" (as defined above) who
has entered into an agreement with the Company to effect a transaction
described in subsections (i), (iii) or (iv) of this definition) whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "Continuing Directors"), cease for any
reason to constitute at least a majority thereof; (iii) the shareholders
of the Company have approved a merger, consolidation, recapitalization,
or reorganization of the Company, or a reverse stock split of any class
of voting securities of the Company, or the consummation of any such
transaction if shareholder approval is not obtained, other than any such
transaction which would result in at least 50% of the combined voting
power of the voting securities of the Company or the surviving entity
outstanding immediately after such transaction being beneficially owned
by persons who together beneficially owned at least 80% of the combined
voting power of the voting securities of the Company outstanding
immediately prior to such transaction with the relative voting power of
each such continuing holder compared to the voting power of each other
continuing holder not substantially altered as a result of the
transaction; provided that, for purposes of this Section 2.7(b)(iii),
such continuity of ownership (and preservation of relative voting power)
shall be deemed to be satisfied if the failure to meet such 50%
threshold (or to substantially preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee
benefit plan of the Company or Group Affiliate, such surviving entity or
a subsidiary thereof; and provided further, that, if consummation of the
corporate transaction referred to in this Section 2.7(b)(iii) is
subject, at the time of such approval by shareholders, to the consent of
any government or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change of Control shall
occur until such time as such consent and approval has been obtained and
any other material contingency has been satisfied; or (iv) the
shareholders of the Company have approved a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any
transaction having a similar effect); provided that, if consummation of
the transaction referred to in this Section 2.7(b)(iv) is subject, at
the time of such approval by shareholders, to the consent of any
government or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change of Control shall
occur until such time as such consent and approval has been obtained and
any other material
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contingency has been satisfied.
The foregoing notwithstanding, a transaction shall not constitute a
Change of Control if its sole purpose is to change the state of the
Company's incorporation. In addition, an initial public offering ("IPO")
of the securities of the Company shall not constitute a Change of
Control for purposes of this Agreement.
(c) IPO. In the event of an IPO, the vesting of the Options shall
accelerate by one (1) year.
(d) Pricing of Options. The exercise or strike price of the Options
shall be determined as follows: the highest average seven (7) day
closing price of Rotech Healthcare, Inc. [XXXX.XX] common stock in the
sixty (60) day period immediately following the announcement of the
employment of the Executive as the CEO of the Company (the "Measurement
Period"), with a minimum of $16 per share and a maximum of $20 per
share. In the event that at any time during the Measurement Period the
stock price exceeds $20 per share, the exercise price for the Options
shall be set at $20 per share and the Measurement Period shall
terminate.
(e) General. Except as otherwise provided for in this Agreement, the
terms and conditions regarding vesting, transfer, exercise and
termination of the Option shall be set forth within and governed by the
Stock Option Agreement and the Plan. The Executive shall be eligible for
grants of additional stock options during the Employment Period, in
accordance with the terms of Company plans and determinations of the
administrators of such plans.
2.8 The Executive agrees to permanently relocate to the Orlando, Florida
metropolitan area by no later than July 1, 2003. The Company will
reimburse the Executive for all reasonable and customary real estate
brokerage commissions and moving expenses incurred by the Executive with
respect to the sale of his home in California as well as any loan
origination fees. In addition, the Company will pay to the Executive one
(1) months' base salary to cover miscellaneous costs and expenses
associated with this relocation. The amount of relocation expenses and
payments actually paid to the Executive pursuant to this paragraph shall
be appropriately grossed up by the Company with all withholding taxes
with respect thereto to be paid by the Company on behalf of the
Executive.
2.9 Nothing contained herein shall prevent the Company from modifying or
terminating at any time any Company-wide plan, policy, benefit or
program. However, the Company may also make available other policies,
benefits or programs.
3 Termination of Employment Relationship
3.1 The Executive's employment with the Company shall automatically
terminate, and the Employment Term shall thereupon terminate:
3.1.1 Upon the Executive's death;
3.1.2 Upon the Company's written notice to the Executive (or his guardian if
applicable) of the
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termination of his employment due to Incapacity (as that term is defined
hereinafter);
3.1.3 In the event this Agreement is not renewed by the Company at the
expiration of the Initial Employment Period or any Renewal Period, if
applicable, following delivery by the Company to the Executive of the
non-renewal notice pursuant to Section 1.4 above;
3.1.4 Upon the Company's written notice to the Executive of the termination of
his employment for Cause (as that term is defined below), provided that
termination will deemed to be under this Section 3.1.4 only if Cause in
fact exists;
3.1.5 Upon not less than thirty (30) days' written notice from the Company to
the Executive of the termination of his employment without Cause;
3.1.6 Upon the termination of the Executive's employment by the Executive for
Good Reason (as defined below);
3.1.7 Upon not less than thirty (30) days' written notice from the Executive
to the Company of his voluntary resignation, if the termination is not
otherwise subject to Section 3.1.6; provided, however, that such
voluntary resignation shall not relieve or release the Executive from
any breach of this Agreement at or prior to the time of such
resignation; or
3.1.8 Upon the closing of a Change of Control (as that term is defined in
Section 2.7(b), above) and the payment to the Executive of the
Separation Benefit (as that term is defined in Section 4.2, below).
3.2 As used herein, the following terms shall have the meanings set forth
below:
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3.2.1 For purposes of this Agreement "Cause" shall be limited to the
following: (a) the conviction of the Executive, or the entry by the
Executive of a plea of guilty or nolo contendere to any felony under the
laws of the United States or any state or political subdivision thereof,
(b) the Executive's engagement in conduct constituting breach of
fiduciary duty, willful misconduct or gross negligence relating to the
Company or the performance of the Executive's duties (including acts of
employment discrimination or sexual harassment) or fraud, (c) the
Executive's breach of any material term of this Agreement, (d) the
Executive's willful failure to follow a reasonable and lawful directive
of the Board within the scope of the Executive's duties (which shall be
capable of being performed by the Executive with reasonable effort)
after written notice specifying the performance required and the
Executive's failure to perform within thirty (30) days after such
notice, or (e) the Executive's substantial and continued failure to
perform the Executive's material duties, including, without limitation,
the responsibilities and duties set forth in Section 1.2 above, in a
satisfactory manner after written notice specifying the areas in which
performance is unsatisfactory and, if subject to cure, the Executive's
failure to perform within thirty (30) days after such notice, (f) the
Executive's breach of any of the Executives covenants under Section 6 of
this Agreement, and (g) the Executive's disparagement of the Company or
any Group Affiliate or any of their collective executives, shareholders,
directors, or officers in any written or oral communication and such
disparagement has a materially adverse effect on the reputation,
goodwill or business of the Company or Group Affiliate. Any notice
required to be provided to the Executive under this Section 3.2.1 shall
state that failure to cure within the applicable period will result in
termination under this Section 3.2.1.
3.2.2 For purposes of this Agreement, "Incapacity" shall mean: the Executive's
incapacitation due to illness, accident or other disability which
renders him substantially unable to perform his normal duties hereunder
for a period aggregating at least one hundred eighty (180) days during
any period of three hundred sixty-five (365) consecutive days, and no
reasonable accommodation being available which would permit the
Executive to perform the essential functions of the Executive's
position.
3.2.3 For purposes of this Agreement, "Good Reason" shall mean the occurrence
of one or more of the following events: (a) the Company's failure to pay
the Executive's Base Salary, earned bonus or additional earned
compensation or its material failure to continue benefits or perquisites
to the Executive hereunder in accordance with the terms of this
Agreement, (b) a decrease in the then-current Base Salary or Target
Bonus of the Executive, (c) without the Executive's written consent,
requiring the Executive to regularly report to work at a facility more
than seventy-five (75) miles from the location of his employment at the
time of the execution of this Agreement, (d) without the Executive's
written consent, the directing to the Executive of any duties or
responsibilities which are materially inconsistent with the Executive's
then current duties, responsibilities, positions and/or titles, (e)
without the Executive's written consent, a material reduction in the
Executive's title, duties, positions or responsibilities or a
substantial adverse alteration in the nature or status of the
Executive's titles or
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responsibilities, (f) without the Executive's written consent, the
failure by the Company to continue in effect any material employee
benefit or compensation plan including, but not limited to, any life
insurance plan, health insurance plan or related covenant and accidental
death or disability plan in which the Executive then participates unless
(i) such benefit or compensation plan, life insurance plan, health
insurance plan, or accidental death or disability plan or similar plan
is replaced with a comparable plan in which the Executive will
participate or which will provide the Executive with comparable
benefits, or (ii) the Company requests that the Executive seek
comparable coverage under another such plan(s) and the Company
reimburses the Executive in full for such coverage, or (g) in the event
of the assignment of this Agreement to a third party, the failure of the
assignee or successor entity to agree to be bound to the terms of this
Agreement. In the event the Executive believes Good Reason to exist, he
must provide the Company with written notice, within ninety (90) days of
his first knowledge of the incident, condition or event, specifying the
bases for his belief that Good Reason exists. If the Company shall not
have cured or eliminated the event constituting Good Reason within
thirty (30) days after receipt of the Executive's written notice, upon
expiration of such 30-day period, the Executive's employment hereunder
shall automatically be terminated.
4 Effect of Termination.
4.1 Upon termination of the Executive's employment and the Employment Period
for any reason, the Company shall compensate the Executive (or, in the
event of the Executive's death, his surviving spouse, if any, or his
estate) for: (a) accrued but unused vacation time, (b) any Base Salary
earned but unpaid for services rendered to the Company on or prior to
the date of termination, (c) any accrued and unpaid bonus earned or
awarded to the Executive, (d) except in the case of a termination under
Section 3.1.4 (termination for Cause) or 3.1.7 (voluntary termination by
the Executive without Good Reason), an amount equal to a pro rata
portion of the current year's Target Bonus based on the portion of the
year expired as of the date of termination, and (e) unreimbursed
business expenses in accordance with the Company's expense reimbursement
policy in effect at the time the expenses were incurred, all without
regard to the performance by the Executive of further services or the
resolution of any contingency, but subject to any and all rights,
remedies and claims of the Company against the Executive. These amounts
will be paid in a lump-sum within thirty (30) days after termination.
4.2 In the event the Executive's employment is terminated or otherwise ends
during the Employment Period pursuant to Section 3.1.5 or 3.1.6, the
Company shall, in addition to the payments provided in Section 4.1, (a)
pay to the Executive a lump-sum severance payment equal to three (3)
times (3X) the sum of the Executive's then current Base Salary plus the
full amount of the Target Bonus for the year in which the termination
occurs, (b) continue to provide for a period of twenty-four (24) months
following the date of termination of employment (or until such earlier
date that substantially the same or better benefits are provided by a
successor employer) all of the benefits set forth in Section 2.5
(excluding further contributions in the 401(k) plan) herein, including,
but not limited to,
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health insurance benefits (for the Executive and his spouse and
dependents, if applicable), life insurance and disability insurance
benefits referenced herein (or if the Executive is not eligible to
remain so covered by the Company's benefit plans, the Company shall pay
for or reimburse the Executive for the cost of COBRA insurance premiums,
and the costs associated with other continuing benefits provided herein,
including the cost of life insurance and disability benefits on a
monthly basis, in advance), and (c) pay the costs of up to twelve (12)
months of executive-level outplacement services at a major outplacement
services firm (collectively, the "Separation Benefit").
4.3 In the event the Executive's employment is terminated during the
Employment Period pursuant to Sections 3.1.1 or 3.1.2, in addition to
the payments provided for in Section 4.1, the Executive (or, in the
event of the Executive's death, his surviving spouse, if any, or his
estate) shall also be entitled to receive the full amount of the
Executive's Target Bonus for the year in which the termination of
employment occurs (less any pro rata portion separately paid under
Section 4.1).
4.4 In the event the Executive's employment with the Company is terminated
or otherwise ends during the Employment Period pursuant to Section
3.1.8, the Executive shall be entitled to the Separation Benefit (as
defined in Section 4.2, above).
4.5 The Separation Benefit is in lieu of any severance, salary or income
continuation or protection under any Company plan, program or policy
that may now or hereafter exist. One-third of the amounts payable under
either Section 4.2 or Section 4.4 shall be deemed to be payment to the
Executive for the Executive's compliance with the covenants and
agreements under Section 5 hereof following termination of employment.
The remaining portion of the Separation Benefit shall constitute
liquidated damages and shall be deemed to satisfy and be in full and
final settlement of all obligations to the Executive under this
Agreement. In order to be eligible to receive the Separation Benefit:
(a) the Executive must execute and deliver a full release of any and all
claims the Executive may have against the Company and Group Affiliates,
and their respective officers, directors, employees, shareholders,
agents and assigns (collectively the "Releasees") arising through the
date the release is executed and a covenant not to xxx the Releasees,
(b) any revocation period provided for in the release described in
Section 4.5(a) must have expired, and (c) the Executive must be and
remain in full compliance with his obligations under Section 5 of this
Agreement.
5 Protection of Confidential Information; Non-Competition
5.1 The Executive and the Company acknowledge that the services the
Executive provides to the Company and, if applicable, to any Group
Affiliate are special and unique. The Executive and the Company further
acknowledge that the business knowledge and relationships of the
Executive acquired during his employment with the Company and
assignments with any Group Affiliate is a critical asset of the Company
and/or to the respective Group Affiliate. In addition, the Executive's
work for the Company and the Group Affiliates will bring him into close
contact with many confidential affairs of the
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Company and the Group Affiliates that are not readily available to the
public and plans for future developments of the Company and respective
Group Affiliates. Accordingly, the Executive hereby agrees that, as a
material and essential condition of his employment by the Company and in
consideration of this Agreement and the compensation and other benefits
provided for herein, he is subject to and encumbered by the restrictive
covenants set forth in this Section 5 and that the Company shall have
the right, on behalf of itself or any other Group Affiliate, to enforce
these restrictive covenants. The Executive expressly agrees that the
reference to the Company in this Section 5 shall mean the Company and/or
the respective Group Affiliate and/or any of the entities or businesses
thereof and that the restrictive covenants and other provisions to which
he is subject pursuant to this Section 5 shall accrue to the benefit of
and apply in favor of the Company and/or such respective Group Affiliate
or any one of them.
5.2 The Executive hereby covenants, warrants and agrees that the Executive
will not, during the period of his employment hereunder or at any time
thereafter, directly or indirectly divulge, use, furnish, disclose or
make available to anyone any Confidential Information, except as may be
necessary for the Executive to communicate on a "need to know" basis in
the ordinary course of performing his duties as an employee and
executive of the Company or in his duly appointed position with one or
more Group Affiliates.
5.3 For purposes of this Agreement, "Confidential Information" shall mean
any and all information, data and knowledge that (a) has been created,
discovered, developed or otherwise become known to the Company or any
Group Affiliate (including, without limitation, information, data and
knowledge created, discovered, developed, or made known by the Executive
during the period of or arising out of his employment by the Company or
assignment with any Group Affiliate) or in which property rights have
been assigned or otherwise conveyed to the Company or Group Affiliate,
which information, data or knowledge has commercial value in the
business in which the Company or Group Affiliate is engaged, except such
information, data or knowledge as is or becomes known to the public
without violation of the terms of this Agreement, or (b) arises out of
or relates to the business affairs of the Company or Group Affiliate
(including without limitation, any information which the Company or
Group Affiliate considers to be privileged). By way of illustration, but
not limitation, Confidential Information includes financial information,
referral source information, product information, supply and service
information, marketing information, data compilations, source code,
personnel information, customer information, trade secrets, business and
customer links and relations, customer lists, contact lists or
information, processes, know-how, improvements, discoveries,
developments, designs, inventions, training methods, sales techniques,
marketing plans, strategies, forecasts, new products, unpublished
financial statements or parts thereof, budgets, projections, licenses,
prices, costs, and employee, customer and supplier lists or parts
thereof, terms of supply or service contracts, terms of agreements
between customers and the Company and any information relating to the
business affairs of the Company or Group Affiliate, in whatever form
maintained. The Executive further acknowledges that such Confidential
Information would inevitably be disclosed were he to become employed
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by, engaged by or otherwise provide competitive services to a competitor
of the Company and/or any Group Affiliate.
5.4 The Executive represents and warrants that all ideas, creations,
improvements and other works of authorship created, developed, written
or received by the Executive at any time during his employment by the
Company and relating to the Company's business and/or operations
(collectively, "Resources") are (a) works for hire within the scope of
his employment, and (b) the sole and exclusive property of the Company
free of any claim whatsoever by the Executive and/or any person claiming
any rights or interests through the Executive.
5.5 The Executive hereby covenants, warrants and agrees that he shall not,
directly or indirectly, make or retain a copy of, nor make or cause to
be made any notes of, nor remove or cause to be removed from the
premises of the Company or any Group Affiliate, any document, notation
or recording, whether mechanically or electronically or physically or
mentally or otherwise maintained or copied, incorporating any trade
secret, Resources or other Confidential Information belonging to or
relating to the Company or any Group Affiliate unless such copying or
making of notes is necessary for the proper and efficient discharge of
his duties on behalf of the Company or Group Affiliate, provided,
however, that if the Board had authorized removal or copying of such
trade secrets, Resources or other Confidential Information, the
Executive shall return such document, papers, copies or notes to the
Company forthwith after the authorized purpose has ceased or has been
completed or on the demand of the Company.
5.6 In the event of the termination of employment of the Executive, whether
by the Company or by the Executive and for whatever reason, the
Executive hereby covenants, warrants and agrees that the Executive will
immediately deliver to the Company, within three (3) days of such
termination or as otherwise directed by the Board: (a) all Confidential
Information, specifically including but not limited to Resources, in
whatever form it is maintained or it exists; (b) all other documents,
reports, notes, customer lists, customer data, business plans,
specifications, programs, computer printouts and data and all other
materials of any nature, whether originals or reproductions and is
whatever form maintained or they exist, pertaining to the Company or any
Group Affiliate, the business affairs of the Company or any Group
Affiliate or the Executive's work with the Company or Group Affiliate,
and the Executive will not, directly or indirectly, take or possess, or
deliver to any other person or entity, any of the foregoing or any
reproduction or variation of any of the foregoing; and (c) any and all
other property or equipment which is properly the property of the
Company or respective Group Affiliate.
5.7 During the period of his employment and for a period of eighteen (18)
months following the voluntary or involuntary termination of his
employment hereunder, and regardless of the circumstances of such
termination, the Executive hereby covenants, warrants and agrees that
the Executive will not, as an individual, agent, partner, investor,
officer or
12
employee of a corporation or any other entity or in any other capacity,
directly or indirectly (a) solicit or induce, or in any manner attempt
to solicit or induce, any person employed by or acting as an agent of
the Company or any Group Affiliate to leave his or her employment with
or engagement by the Company or Group Affiliate or to join another
enterprise or company which is engaged in the Business of the Company or
in any way competes with the Company or Group Affiliate in any of their
business areas or interests or in any way competes with the Company or
Group Affiliate as an employee or agent; or (b) hire, contract with or
otherwise employ or engage any current employee of the Company (or any
former employee who had been employed by the Company within sixty (60)
days of such hire or engagement or attempt to hire, engage or contract
by the Executive), agent or consultant of the Company or Group Affiliate
to join another common enterprise or entity which is engaged in the
Business. For purposes of this Agreement, the term "Business" shall mean
an enterprise of which its primary business is durable medical equipment
and/or home respiratory products or services (e.g., without limitation,
Lincare Holdings Inc. or Apria Healthcare Essentials, LLP).
5.8 During the period of his employment and for a period of two (2) years
following the voluntary or involuntary termination of his employment
hereunder, and regardless of the circumstances of such termination, the
Executive shall not, as an individual, agent, partner, investor, officer
or employee of a corporation or any other entity or in any other
capacity, directly or indirectly (a) induce or attempt to induce any
customer or supplier of the Company or any Group Affiliate to cease
being a customer or supplier of the Company or Group Affiliate; (b)
induce or attempt to induce any customer or supplier of the Company or
Group Affiliate to become a customer or supplier of any person, firm or
corporation which is engaged in the business of home medical equipment,
home oxygen therapy, products and services and durable medical equipment
and related specialty healthcare services and products or in any way
competes with the Company or Group Affiliate in any of their business
areas or interests; (c) enter the employ of, or render any services to,
any person, firm or corporation which is engaged in the Business or that
in any way competes with the Company or Group Affiliate in any of its
business areas or interests in the United States or any other
jurisdictions as to which the Executive has performed services for the
Company and/or any Group Affiliate; (d) interfere with the business
relationships or prospective business relationships of the Company
and/or any Group Affiliate; or (e) otherwise compete with the Company or
Group Affiliate in the United States or any other jurisdiction as to
which the Executive has performed services for the Company and/or Group
Affiliate.
5.9 The Executive covenants, warrants and agrees that, during the period of
his employment by the Company and for a period of two (2) years after
the termination of his employment, regardless or the circumstances of
such termination, he shall immediately provide a copy of this Agreement
to any prospective employer or other entity in connection with any
consideration of the Executive for employment or engagement elsewhere
which may conflict with the Executive's obligations under this Agreement
or which is in a business that competes in any manner with any of the
business areas or interests of the Company or
13
any Group Affiliate.
5.10 The Executive covenants, warrants and agrees that, during the period of
his employment and at any time thereafter, he shall not make statements
or representations, or otherwise communicate, directly or indirectly, in
writing, orally, or otherwise, or take any action which may, directly or
indirectly, disparage or be damaging to the Company, its successors,
subsidiaries or any Group Affiliate or their respective officers,
directors, employees, advisors, businesses or reputations, and the
Company, its successors, subsidiaries and any Group Affiliates and their
respective officers, employees, and agents shall not make any such
statements or representations regarding the Executive. Notwithstanding
the foregoing, nothing in this Agreement shall preclude the Executive or
any other person from making truthful statements that are required by
applicable law, regulation or legal process.
5.11 The Executive agrees to cooperate with the Company and any Group
Affiliate, during the period of his employment and at any time
thereafter, by making himself available to testify on behalf of the
Company or any successor, subsidiary or affiliate of the Company, in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any successor, subsidiary
or affiliate of the Company, in any such action, suit, or proceeding
(excluding a proceeding brought by the Company or a Group Affiliate
against the Executive or brought by the Executive against the Company or
a Group Affiliate), by providing information and meeting and consulting
with the Board or its representatives or counsel, or representatives or
counsel to the Company, or any subsidiary or affiliate of the Company,
as may be reasonably requested and after taking into account the
Executive's responsibilities and obligations to third parties. The
Company agrees to reimburse the Executive, on an after-tax basis, for
all expenses actually incurred in connection with his provision of
testimony or assistance hereunder.
5.12 If the Executive commits a breach of any of the provisions of Sections
5.2, 5.4, 5.5, 5.6, 5.7, 5.8, 5.10 or 5.11, the Company shall have the
right and remedy to have the provisions of this Agreement specifically
enforced by way of a temporary restraining order and/or a preliminary
and/or permanent injunction by any court having jurisdiction, without
the posting of any bond or security by the Company, it being
acknowledged and agreed by the Executive and the Company that any such
breach will cause irreparable injury to the Company or respective Group
Affiliate and that money damages will not provide an adequate remedy to
the Company or to such Group Affiliate. Such right and remedy shall be
in addition to, and not in lieu of, any other rights and remedies
available to the Company and/or any Group Affiliate under law or in
equity. Further, should the Company commence an action for injunctive
relief; the Company shall have the right in the same proceeding and
court to seek and obtain money damages caused by such breach.
5.13 If any of the covenants or other provisions contained in Sections 5.2,
5.4, 5.5, 5.6, 5.7, 5.8, 5.10 or 5.11, or any part thereof, is hereafter
construed to be invalid or unenforceable in any respect, the same shall
not affect the remainder of the covenants, covenants or provisions which
shall be given the maximum effect possible without regard to the invalid
14
portions and the remainder shall then be fully enforceable.
5.14 If any of the covenants or other provisions contained in Sections 5.2,
5.4, 5.5, 5.6, 5.7 or 5.8, or any part thereof, is hereafter held to be
unenforceable because of the duration of such provision or the
geographical or product/business area covered thereby, the parties agree
that such provisions shall be reformed and construed to reduce the
duration and/or area of such provision to the extent necessary for
enforceability and, in its reduced form, said provision shall then be
fully enforceable.
5.15 The covenants and other provisions of this Section 5 shall survive the
termination of this Agreement or the voluntary or involuntary
termination of the Executive's employment regardless of the
circumstances of such termination.
6 Notices
All notices or other communications given pursuant hereto by one party
to another shall be in writing and deemed given when (a) delivered by
hand, (b) sent by fax/telecopier (with receipt confirmed), provided that
a copy is mailed the same day by registered or certified mail, postage
prepaid, return receipt requested, or (c) when received by the
addressee, if sent by Express Mail, Federal Express or other express
delivery service (receipt requested), in each case to the appropriate
addresses and fax/telecopier numbers for the Company and the Executive
set forth below (or to such other address and/or fax/telecopier number
as either party may designate by notice to the other from time to time).
If to the Company:
Rotech Healthcare Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
Attn: Chairman of the Board of Directors
with a copy to:
Chief Legal Officer
Rotech Healthcare Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
or in case of change of location of the Company at the new location,
i.e., the Company's new business address.
If to the Executive, to him at:
15
Xxxxxx X. Xxxxxx
000 Xxxxxxxx
Xxxx Xx Xxxx, XX 00000
Fax No. (000) 000-0000
or, if delivered by hand, delivered to the Executive at the Company or to him at
home or such other place of his employment.
7 General
7.1 The Executive shall be under no duty to seek further employment or to
mitigate any of the obligations or damages payable by the Company
following termination of employment (although certain provisions hereof
reduce the Company's obligations hereunder if comparable benefits are
obtained by the Executive following termination).
7.2 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating
to the subject matter hereof.
7.3 This Agreement may not be amended, modified, superseded or waived,
except by a written instrument executed by both parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any
provision hereof, or any similar provision or policy applicable to any
other individual, shall in no manner affect the right of either party at
a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement whether by
conduct or otherwise, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach,
or a waiver of the breach of any other term or covenant contained in
this Agreement
7.4 The parties hereto agree that the Company shall have the right to
enforce this Agreement on its own behalf and/or on behalf of the Group
Affiliates or any of them.
7.5 This Agreement shall be subject to and governed by the laws of the State
of Delaware.
7.6 This Agreement may be executed in any number of counterparts each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
7.7 The article headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
7.8 A telecopy signature on this Agreement shall have the same force and
effect as an original signature.
8 Severability
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If any provision of this Agreement is hereafter construed to be invalid
or unenforceable in any respect, the same shall not affect the
retraining provisions of this Agreement, without regard to the invalid
portion, and any such invalid provisions shall be reformed and construed
to the extent necessary to permit their enforceability so as to reflect
the intent of the parties hereto.
9 Representation
The Company and the Executive represent and warrant that each is fully
authorized and empowered to enter into this Agreement and that the
performance of each of their respective obligations under this Agreement
will not violate any agreement between each of them and any other
person, firm or organization.
10 Survivorship
The respective rights and obligations of the parties hereunder shall
survive any termination of the Executive's employment or this Agreement
to the extent necessary to the intended preservation of such rights and
obligations.
11 Successors and Assigns
The respective rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the
respective successors and assigns of the Company. This Agreement is
assignable by the Company to any corporate entity which acquires
directly or indirectly by merger, consolidation, purchase or otherwise,
all or substantially all of the assets or stock of the Company. Upon
such assignment, the Company shall be released from all liability
hereunder. This Agreement shall not be assignable by the Executive.
12 Effective Date
This Agreement shall become effective and enforceable upon the execution
of this Agreement by both parties (the "Effective Date").
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ROTECH HEALTHCARE INC.
By ________________________________
Date _______________________________
17
EXECUTIVE
_____________________________________
Xxxxxx X. Xxxxxx
Date ________________________________
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