EXHIBIT 10.16
TRANSWORLD HEALTHCARE, INC.
000 XXXXXXX XXXXXX
XXX XXXX, X.X. 00000
September 24, 2001
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxx:
We write to set forth our agreement with respect to your employment as
Chairman and Chief Executive Officer of Transworld Healthcare, Inc., a New York
corporation (the "Company").
1. SERVICES. The Company hereby agrees to employ you, and you hereby
agree to be employed by the Company, on the terms and conditions hereinafter set
forth. You will serve as Chairman of the Board ("Chairman") and Chief Executive
Officer of the Company, and will render such services and perform such duties
for the Company and its direct and indirect subsidiaries (collectively, with the
Company, the "Company Group") as customarily are performed by chief executive
officers, including, without limitation, those services and duties consistent
with your position as the Board of Directors may from time to time reasonably
assign to you. You agree to serve as a member of the Board of Directors of the
Company. You will, in addition, hold such offices, directorships and other
positions with the Company Group, as are consistent with your status as Chairman
and Chief Executive Officer, to which you may from time to time be elected or
appointed. Your authority shall be subject at all times to the direction and
control of the Board of Directors of the Company and to the Board's discretion
to determine the policies of the Company Group. You agree to serve the Company
Group to the best of your ability and to devote your full working time,
attention, energy and skills exclusively to the business and affairs of the
Company Group and to the promotion and advancement of its interests, except that
you may devote up to ten percent (10%) of your business time to other matters
that are not competitive with the Company's business.
2. COMPENSATION. As full compensation for all of your services
(including services as a director and as an officer of the Company Group, if you
are so appointed or elected), you shall receive the following:
(a) During your employment hereunder you shall receive a base
salary at the rate of Three Hundred Eighty Thousand Dollars ($380,000) per annum
payable in accordance with the Company's normal payroll practices. In addition
to your base salary, you and the Company agree to negotiate in good faith
commencing not less than 90 days prior to each annual anniversary date during
the term of this Agreement, to determine the amount of the annual increase, if
any, in your base salary.
Xx. Xxxxxxx X. Xxxxxx
September 24, 2001
Page 2
(b) In the discretion of the Board of Directors of the
Company, you may receive annual bonuses at such times and in such amounts as may
be determined by the Board of Directors.
(c) All options heretofore granted to you by the Company
shall immediately become exercisable upon a "Change in Control of the Company"
(as defined in paragraph 3(d) below).
(d) All payments required to be made by the Company to you
under this Agreement shall be subject to withholding, social security, payroll
and other applicable taxes and deductions.
3. TERM. (a) Subject to the occurrence of a Termination Event (as
defined below), your employment under this Agreement shall be effective for a
period of time (the "Term") starting on the date hereof (the "Effective Date")
and continuing for three (3) years thereafter; provided, however, that, on each
anniversary of the Effective Date, a one-year extension shall be automatically
added to the then remaining Term unless ninety (90) days prior to such
anniversary, either party provides the other with written notice of its intent
to terminate the employment, in which case this Agreement shall terminate on
such anniversary of the Effective Date. During the 90 days notice period, the
Company shall continue to compensate you at the rate of your compensation in
effect as of the commencement of the 90-day notice period. (ii) For purposes of
this Agreement, "Termination Event" means one or more of the following events
the occurrence of which shall cause the termination of this Agreement: (A) the
date of your death; (B) if, as a result of your physical or mental disability as
determined by a qualified physician licensed to practice medicine in the State
of New York and selected by the Company's Board of Directors, the Board of
Directors reasonably determines that you have failed, or have become unable to
perform one or more material duties to the Company for a period of more than
three (3) consecutive months, or a period of more than one hundred eighty (180)
days in the aggregate in any eighteen (18) month period, the date on which the
Company shall elect to terminate your employment by reason of such disability;
(C) the date on which the Company shall elect to terminate your employment for
"cause" (as defined below); (D) the date on which you shall elect to terminate
your employment for good "reason" (as defined below); and/or (E) the date on
which you or the Company shall elect to terminate your employment following a
Change in Control of the Company (as defined below) pursuant to paragraph 8 of
this Agreement.
(b) For purposes of this Agreement, "cause" means any one or
more of the following: (i) you are convicted of or plead guilty or nolo
contendere to a felony or other crime; (ii) willful and continued misconduct by
you relating to the Company, including, without limitation, your willful and
continued failure to perform stated duties; (iii) the willful engaging by you in
gross misconduct materially and demonstrably injurious to the Company; or (iv)
any willful and material breach by you of the terms of this Agreement. For
purposes of this paragraph 3(b), no act or failure to act by you shall be
considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in the best
interest of the Company. For purposes of this Agreement, you shall not be deemed
to have been terminated for cause unless and until there shall have been
delivered to you a copy of a resolution, duly adopted by the affirmative vote of
not less than a majority of the
Xx. Xxxxxxx X. Xxxxxx
September 24, 2001
Page 3
entire membership of the Board of Directors of the Company at a meeting called
and held for this purpose after reasonable written notice to you and an
opportunity for you, together with your counsel, to be heard by the Board,
finding that, in the good faith opinion of the Board, you are guilty of conduct
of the type described in this paragraph 3(b) defining "cause", and specifying
the particulars thereof.
(c) For purposes of this Agreement, "good reason" shall mean
(i) your failure to serve as member of the Board and Chairman of the Board and
Chief Executive Office of the Company for any reason other than a voluntary
resignation by you or your removal for cause; (ii) the failure of the Company to
nominate you for election as Chairman of the Board and Chief Executive Officer
at any election or appointment of officers unless you decline to stand for
election; (iii) the failure by the Company to obtain from any successor or
assign of all or substantially all of the business of the Company, before the
succession or assignment takes place, an agreement to assume and perform this
Agreement; (iv) any purported termination of your employment for cause which is
not effected pursuant to a notice described in paragraph 3(b) above; (v) without
your written consent, the assignment to you of any substantial duties
inconsistent with your status as Chairman of the Board and Chief Executive
Officer of the Company or a substantial alteration in the nature or status of
your responsibilities, or an adverse and substantial alteration in your
reporting responsibilities, titles or offices, or any removal of you or failure
to re-elect you to any of such positions, except in connection with the
termination of your employment; (vi) a relocation from your principal place of
residence at 00 Xxxxxx Xxxxxx, Xxx. 0, Xxx Xxxx, Xxx Xxxx 00000 (as such
principal residence may change from time to time) reasonably necessitated by (x)
a change occurring after the Effective Date in one or more places (specifically
excluding the United Kingdom) in which the Company does business or in which the
Company requires that you provide your services; or (y) a requirement by the
Company that you relocate to a new principal place of residence (specifically
including the United Kingdom); (vii) a reduction in your base salary unless such
reduction was with your prior consent; or (vi) any material breach by the
Company of this Agreement.
(d) For purposes of this Agreement:
(i) "Change in Control of the Company" means the
occurrence of any of the following while you are employed by the Company under
this Agreement: (A) any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) other than Hyperion Partners II L.P., its affiliates and partners shall
become the "beneficial owner" (within the meaning of Rule 13d-3 under the
Exchange Act) of more than 30% of the outstanding capital stock of the Company
entitled to vote for the election of directors ("Voting Shares"); (B) there
shall be consummated a merger or consolidation of the Company with one or more
other corporations as a result of which the holders of the outstanding Voting
Shares of the Company immediately before the merger or consolidation hold less
than 51% of the Voting Shares of the surviving or resulting corporation; (C)
there shall be consummated the sale of all or substantially all of the assets of
the Company and its subsidiaries taken as a whole; or (D) during any period of
two (2) consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's stockholders, of each new director was approved by
a
Xx. Xxxxxxx X. Xxxxxx
September 24, 2001
Page 4
vote of at least a majority of the directors then still in office who were
directors at the beginning of the period. "Change in Control of the Company"
shall not mean or include the merger, consolidation, or other reorganization of
the Company and/or the sale, assignment, lease or other transfer of all or
substantially all of the assets of the Company, to or with any Subsidiary and/or
Affiliate, or by any Subsidiary and/or Affiliate to or with another Subsidiary
and/or Affiliate.
(ii) "Affiliate" of the Company means a corporation or
other entity which, directly or indirectly, is in control of, is controlled by,
or is under common control with the Company. For purposes of this definition,
control of a corporation or other entity means the power, direct or indirect,
(A) to vote 51% or more of the securities having ordinary voting power for the
election of directors of such corporation or other entity, or (B) to direct or
cause the direction of the management and policies of such corporation or other
entity whether by contract or otherwise.
(iii) "Subsidiary" of the Company means a corporation or
other entity whose shares of stock or other ownership interests having ordinary
voting power to elect a majority of the directors (or other persons performing
similar functions of such corporation or entity) are owned, directly or
indirectly, by the Company.
4. CERTAIN BENEFITS. During your employment hereunder, subject to your
meeting applicable eligibility requirements, the Company shall provide you with
such life, disability, health insurance and other benefits as are generally made
available to senior executive employees of the Company. You shall be entitled to
receive six (6) weeks of paid vacation during each year of the term of your
employment hereunder.
5. REIMBURSEMENT OF EXPENSES. During your employment hereunder, the
Company will reimburse you for your reasonable, ordinary and necessary travel
and other business expenses incident to your rendering of services hereunder, in
conformity with the Company's regular policies from time to time in effect
regarding reimbursement of expenses. Payments to you for such expenses will be
made upon presentation of expense statements in such detail as the Company may
from time to time reasonably require.
6. CONFIDENTIALITY. You acknowledge that, in the course of your
employment, you will be occupying a position of trust and confidence with the
Company Group. You further acknowledge that you will have access to valuable
trade secrets and confidential information of the Company Group solely as a
result of your position with the Company. You agree that you will not make use
of or disclose, directly or indirectly, any trade secrets or confidential
information of the Company Group, except that you may disclose such information
(i) to the extent necessary to perform your obligations under this Agreement and
in furtherance of the best interests of the Company Group; (ii) to the extent
required by applicable law; or (iii) if expressly consented to by the Company.
The provisions of this paragraph 6 shall survive the expiration or termination,
for any reason, of this Agreement.
7. REPRESENTATIONS. You hereby represent and warrant to the Company
that you have full legal authority to enter into this Agreement and to perform
your obligations hereunder, that you have no obligation to any other person or
entity that would affect or conflict with any of your obligations hereunder, and
that the complete performance of your obligations hereunder
Xx. Xxxxxxx X. Xxxxxx
September 24, 2001
Page 5
will not violate, result in a breach of, or constitute a default under, any law,
regulation, order or decree of any governmental or judicial body or any contract
by which you are bound.
8. SEVERANCE COMPENSATION (a) You and the Company shall each be
entitled to terminate your employment hereunder at any time within six (6)
months following a Change in Control of the Company.
(b) In the event your employment is terminated by the Company
for any reason whatsoever (other than your death or disability or the
termination of your employment for "cause") or if, within six (6) months
following a Change in Control of the Company, you or the Company terminates your
employment hereunder for any reason (other than your death or disability or the
termination of your employment for "cause"), or if at any time during the term
of this Agreement, you terminate your employment for "good reason", then (i) all
stock options you hold in the Company's common stock or the securities of its
subsidiaries shall vest immediately; (ii) the Company shall pay to you, as
severance pay, in cash, within sixty (60) days following the termination of your
employment, an amount equal to 2.9 times your annual base salary hereunder
during the last twelve (12) months preceding the Change in Control of the
Company or the termination of your employment under this Section 8, (or during
such lesser period during which you were employed by the Company); and (iii) the
Company shall provide to you for a period of twelve (12) months following the
date of termination, at the expense of the Company, the Company benefits to
which you have been entitled immediately prior to the date of termination,
provided that if at any time during such twelve (12) month period, you become
entitled to or otherwise obtain some or all of such benefits, then the
obligation of the Company to provide you with those benefits shall immediately
cease.
9. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be deemed to have been duly given when personally
delivered or when sent by certified mail, return receipt requested, postage
prepaid, as follows:
If to the Company:
Transworld Healthcare, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Company Secretary
With a copy to:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to you, at your address as set forth above.
Either party may change its or his address for the purpose of this paragraph by
written notice similarly given.
Xx. Xxxxxxx X. Xxxxxx
September 24, 2001
Page 6
10. SEVERABILITY. If any clause or provision of this Agreement shall be
held to be invalid or unenforceable, such clause or provision shall be construed
and enforced as if it had been more narrowly drawn so as not to be invalid or
unenforceable, and such invalidity or unenforceability shall not affect or
render invalid or unenforceable any other provision of this Agreement.
11. MISCELLANEOUS. This Agreement sets forth the parties, final and
entire agreement, and supersedes any and all prior understandings, with respect
to its subject matter. The headings in this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Company, its
successors and assigns, and upon you, your heirs, administrators and legal
representatives, but no right or obligation hereunder may be assigned or
delegated. No failure or delay by either party in exercising any right, option,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof, or the exercise of any other right, option, power or privilege. In the
event of a breach of this Agreement by the Company, you incur certain costs and
expenses including reasonable legal fees and in order to enforce your rights
hereunder, the Company will reimburse you for such expenses. This Agreement can
only be changed, waived or terminated only by a writing signed by both you and
the Company and shall be governed by the internal laws of the State of New York
(without reference to its rules as to conflicts of laws). This Agreement may be
executed in counterparts, each of which shall be deemed an original, but both of
which taken together shall constitute one and the same document.
If the foregoing correctly sets forth your understanding of our
agreement, please so indicate by signing and returning to us a copy of this
letter.
TRANSWORLD HEALTHCARE, INC.
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: On behalf of and pursuant to the
Direction of Transworld Healthcare, Inc.'s
Board of Directors.
ACCEPTED AND AGREED TO ON THIS 24 DAY OF September, 2001:
/s/ Xxx Xxxxxx
Xxxxxxx X. Xxxxxx
