EXHIBIT 10.59
CORAM EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the
1st day of August 2000, between CORAM, INC. (the "Company"), and XXXXX X.
XXXXXX (the "Employee").
WHEREAS, the Company and the Employee desire to set forth the
terms and conditions of Employee's employment with the Company.
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT OF THE EMPLOYEE.
1.1 DUTIES AND STATUS
1.1.1 EMPLOYMENT DUTIES. The Company hereby engages the
Employee as Senior Vice President, Chief Accounting Officer of the
Company. The Employee accepts such employment on the terms and
conditions set forth in this Agreement. During Employee's employment
with the Company, the Employee shall exercise such authority and
perform such duties as are normally associated with the position of
Senior Vice President and Chief Accounting Officer, as described in the
job description for such position from time to time, and such other
reasonable duties related to the operation of the Company as may be
assigned to Employee from time to time by Employee's supervisor, the
Chief Executive Officer or by the Board of Directors of the Company
(the "Board").
(a) TIME. The Employee agrees to devote substantially
all of Employee's business time, attention, skill and best efforts to
the performance of Employee's duties as an employee of the Company.
1.2 TERM. The term of employment provided for in this Agreement shall
be for one (1) year from the date first written above ("Term"). Provided,
however, the Agreement shall terminate prior to the end of the Term upon 1) a
Change in Control if terminated by Employee pursuant to Section 3.3 herein; 2)
the thirty-first day after Employee's resignation; 3) Employee's death or
Permanent Disability (as defined below in Subsection 1.2.1(a); or 4) by the
Company as described in Sections 3.1 and 3.2 herein.
1.2.1. If this Agreement is terminated as a result of the
Employee's death or Permanent Disability, the Company shall pay amounts
due to Employee through the date of termination pursuant to Sections
3.1(a), (b) and (c) herein.
CORAM EMPLOYMENT AGREEMENT
Page 2 of 12
(a) For purposes of this Agreement, "Permanent
Disability" shall mean the expiration of a continuous period
of 180 days during which Employee is unable to perform
assigned duties due to physical or mental incapacity or
disability.
2. COMPENSATION AND BENEFITS.
2.1 CASH COMPENSATION. As cash compensation for Employee's
services under this Agreement, the Employee shall be compensated as follows:
2.1.1 BASE SALARY. The Company shall pay the Employee an
annual salary (the "Base Salary") in periodic equal installments in
accordance with the normal payroll practices of the Company. Employee's
initial Base Salary shall be Two-Hundred Thousand Dollars ($200,000)
and shall be subject to periodic review.
2.1.2 ACQUISITION BONUS. In addition to the Base Salary and
any bonuses payable to Employee, Employee shall also be entitled to
receive an Acquisition Bonus in the amount of $200,000.00 payable to
Employee as described below. The Acquisition Bonus shall be paid
concurrently with
(a) the consummation of a merger or
consolidation which results in the holders of voting
securities of the Company (other than a trustee or other
fiduciary of an Employee Benefit Plan or Cerberus Partners
L.P., Xxxxxxx Xxxxx Credit Partners L.P., and Foothill Capital
Corporation or their affiliates, or a group composed
principally thereof) outstanding immediately prior thereto
failing to continue to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;
(b) or the sale or disposition by the
Company of all or substantially all of the Company's assets or
any transaction having similar effect other than a liquidation
of the Company.
2.1.3. BONUS/INCENTIVE PLAN COMPENSATION. Employee shall be
eligible for annual bonus compensation in an amount determined,
pursuant to the Company's Bonus or Incentive Plan as modified and in
effect from time to time, if and when Employee is eligible according to
the terms and conditions of the particular plan.
2.1.4 DISCRETIONARY BONUS. In addition to all other
compensation due or payable hereunder, the Employee may be paid
additional cash bonuses. Such cash bonuses, if any, shall be determined
in the sole discretion of the Chief Executive Officer or by the Board.
2.2 ADDITIONAL BENEFITS. In addition to all compensation due or
payable hereunder, the Company will provide the Employee with additional
benefits as follows:
CORAM EMPLOYMENT AGREEMENT
Page 3 of 12
2.2.1 EXPENSES. The Company will reimburse the Employee for
such reasonable out-of-pocket expenses as the Employee may incur in the
rendition of the services contemplated hereby upon presentation of
written documentation in accordance with the Company's then applicable
Expense and Travel Policies.
2.2.2 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Employee is
entitled to participate in any health, medical, dental, disability,
medical reimbursement and group life insurance plan and each other
qualified or nonqualified employee benefit plan covering employees of
the Company, if and when Employee is eligible according to the terms
and conditions of the particular plan.
2.2.3 CAR ALLOWANCE. The Employee is entitled to a car
allowance in the amount of Nine Hundred Dollars ($900.00) per month.
The Company shall also pay to Employee an amount equal to the
"Grossed-up Tax Liability" for the car allowance. For purposes of this
Agreement, the "Grossed-up Tax Liability" shall mean an amount which,
after Employee's payment of federal and state income tax liabilities
arising on the receipt of the Grossed-up Tax Liability payment, shall
equal the amount of the "Benefits Tax Liability". The term "Benefits
Tax Liability" shall mean the sum of federal and state income tax
liability which is payable by Employee upon receipt of the car
allowance.
3. SEVERANCE PROVISIONS.
3.1 EMPLOYEE'S TERMINATION OR COMPANY TERMINATION FOR CAUSE. If the
Employee's employment under this Agreement is terminated at the Employee's
volition upon thirty (30) days notice, due to Employee's death or Permanent
Disability, or the Company terminates employment for cause (as defined below in
part 3.1(d) of this Agreement), on the date of termination the Employee shall be
entitled to receive, and the Company shall pay to the Employee:
(a) Base Salary and any other earned, but unpaid, compensation
for the period ending on such termination;
(b) Reimbursements pursuant to Subsection 2.2.1 hereof for
expenses incurred prior to the date of termination; and
(c) Benefits pursuant to Subsection 2.2.2 hereof, if any,
payable to or on behalf of the Employee upon Employee's termination of
employment under any employee benefit plans, under the terms and
conditions for benefit payments set forth in such plans.
(d) For purposes of this Agreement, "for cause" shall mean
conduct by the Employee amounting to: (i) fraud or dishonesty in the
course of employment with the Company; (ii) willful misconduct or
knowing violation of law in the course of employment with the Company;
(iii) a conviction or plea of guilty or nolo contendere to a felony, or
other crime involving dishonesty or relating in any way to Employee's
job
Page 4 of 12
duties; or (iv) failure or refusal to satisfactorily perform
Employee's job duties or functions.
CORAM EMPLOYMENT AGREEMENT
3.2 COMPANY'S TERMINATION WITHOUT CAUSE.
3.2.1 SEPARATION BENEFITS. If the Employee's employment under
this Agreement is terminated by the Company without cause at any time
during the Term and upon the execution by Employee of the Company's
Standard Separation and Waiver Agreement as described below, the
Employee shall be entitled to receive, and the Company shall pay or
provide to the Employee:
(a) the amounts and benefits set forth in Sections
3.1(a), (b) and (c);
(b) an additional amount in the form of Base Salary
(at the rate in effect at the time of termination) and health
benefits (subject to the terms and conditions in effect at the
time of termination) for a period of time equal to one (1)
year ("Severance"). Such health benefits will be provided
under COBRA coverage and Employee will be required to continue
paying his or her portion of the premium (at the rate in
effect at the time of the termination) for the Severance
period.
3.2.2 PAYMENT METHOD. Severance payments shall be made
according to the regular and customary payroll and benefits practices
of the Company and subject to the terms and condition of the Company's
standard Separation and Waiver Agreement. Such payments shall not be
made unless and until Employee executes and delivers a Separation and
Waiver Agreement, including a general release of the Company (in a form
reasonably satisfactory to and prepared by the Company) from all claims
by the Employee relating to employment or the termination of
employment, except for the obligations of the Company under this
Agreement.
3.3 CHANGE IN CONTROL. Within sixty (60) days of any Change in Control
of the Company, as defined below, Employee shall be entitled to terminate the
Agreement by giving written notice to the Company in accordance with Section 5
herein. In the event of such termination by Employee, Employee shall be entitled
to receive Severance in accordance with Section 3.2.1 and 3.2.2 of this Section.
If, however, Employee does not notify the Company in accordance with Section 5
herein of his intent to terminate this Agreement within sixty (60) days of any
Change in Control, he shall no longer be entitled to terminate the Agreement and
the Company shall be under no obligation to pay him Severance pursuant to this
Section 3.3.
(a) For purposes of this Agreement, a Change in Control of the
Company shall be deemed to have occurred if: (i) any "person" (as such
term is defined in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (other than a trustee or
other fiduciary holding securities of the Company under an employee
benefit plan of the Company or Cerberus Partners L.P., Xxxxxxx Xxxxx
Credit Partners L.P., and Foothill Capital Corporation or their
affiliates, or a group composed principally thereof, becomes the
beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company
representing
CORAM EMPLOYMENT AGREEMENT
Page 5 of 12
50% or more of (A) the outstanding shares of Common Stock of the
Company or (B) the combined voting power of the Company's then-
outstanding securities entitled to vote generally in the election
of directors; (ii) during any period of not more than two consecutive
years, individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a
transaction described in paragraph (i) or (iii) of this paragraph 3(a))
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the
directors still in office who were either in office at the beginning of
such period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of the
Board; or (iii) the shareholders of the Company approve a merger or
consolidation which would result in the holders of voting securities of
the Company outstanding immediately prior thereto failing to continue
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (iv) or the shareholders of the Company approve 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,
however, that any Change in Control which may be triggered by a change
of ownership contemplated by the Plan of Reorganization confirmed in
the proceeding IN RE CORAM HEALTHCARE CORPORATION AND CORAM, INC., No.
00-3299 through 00-3300 (MFW) (Bankr. D. Del. filed August 8, 2000)
shall not be considered a Change in Control pursuant to Section 3.3 and
the Employee shall not be entitled to terminate this Agreement or
receive any payments under Section 3.3 herein.
4. RESTRICTIVE COVENANTS.
4.1 NONDISCLOSURE AND CONFIDENTIALITY.
4.1.1 Employee acknowledges that, the information,
observations and data obtained by Employee during employment with the
Company pertaining to the business or affairs of the Company are the
property of the Company, all of which is hereby agreed to constitute
confidential information of the Company ("Confidential Information").
To ensure the continued secrecy and confidentiality of such
information, Employee hereby covenants and agrees that during the
Employee's employment with the Company and for a period of five (5)
years after Employee's termination, Employee shall keep secret and
shall not divulge any of the names of, or any other information
relative to, the clients, business and affairs of Company, and any and
all business associations or activities of Company and its clients or
any other information, observation, data or other Confidential
Information that Employee acquires during Employee's employment with
the Company. . Employee also further covenants and agrees that Employee
will not keep, or use for Employee's personal advantage, either
directly or indirectly, any written Confidential Information
(regardless of the manner or form in which such documentation exists)
relative to the business or affairs of the Company or its clients and,
furthermore, will not furnish or make available any such information to
any third party.
CORAM EMPLOYMENT AGREEMENT
Page 6 of 12
4.1.2 Employee acknowledges that the Company's trade secrets
include, but are not limited to accounting, finance and pricing
information, pricing and business analysis tools, processes, formulae,
data, know-how, software programs, improvements, marketing materials,
inventions (whether patentable or not), techniques, marketing plans,
strategies, forecasts, computer programs and other copyrightable
material, the compensation and terms of employment of other employees,
customers and customer lists, vendor and vendor lists and other
information relating to the Company's business which is secret and of
value ("Trade Secrets"). The parties agree that such Trade Secrets are
the property of the Company, shall remain under the full control of the
Company and shall be provided to Employee on a need to know basis. In
consideration for entering into this Agreement, Employee hereby
covenants and agrees that during Employee's employment with the Company
and thereafter, Employee shall not divulge to any third party at any
time any information regarding such Trade Secrets or the substance
thereof without the prior written consent of the Company and,
furthermore, with respect to such Trade Secrets, Employee shall comply
with all of the provisions of Section 4 hereof.
4.2 AGREEMENT NOT TO SOLICIT EMPLOYEES. During the Employee's
employment with the Company and for a period of one (1) year following the
termination of such employment, provided the Company is not in breach or default
hereof, the Employee shall not on the Employee's own behalf or on behalf of
others, either directly or indirectly, solicit, divert or hire, or attempt to
solicit, divert or hire, employees of the Company, whether the employment of any
such person is pursuant to a written agreement, for a determined period, or
at-will.
4.3 AGREEMENT NOT TO SOLICIT COMPANY CLIENTS. During the Employee's
employment with the Company and for a period of one (1) year following the
termination of such employment, provided the Company is not in breach or default
hereof, the Employee shall not on the Employee's own behalf or on behalf of
others, either directly or indirectly, contact, solicit, divert, take away or
attempt to contact, solicit, divert, or take away any Company Client. For
purposes of this Agreement, "Company Client" shall mean any person, corporation,
partnership, entity or legal organization to whom the Company sold its services
or products or solicited to sell its products or services during the twelve (12)
months prior to the termination of Employee's employment.
4.4 AGREEMENT NOT TO COMPETE. Employee acknowledges that Employee is an
executive or a manager for the Company and as such, has access to information
which represents Trade Secrets and Confidential Information of the Company.
Employee further acknowledges that, should Employee perform work or services for
a Competing Business, as defined below, (in any capacity including, but not
limited to, as an employee, officer, agent, consultant or independent
contractor), Employee necessarily would rely on or inevitably disclose such
Trade Secrets and Confidential Information. As a result, Employee agrees that,
during the Employee's employment and for a period of one (1) year following the
termination of such Employment, provided the Company is not in breach or default
hereof, the Employee shall not (except with the prior written consent of the
Company), within the Restricted Territory as defined below, either directly or
indirectly, on Employee's own behalf or in the service or on behalf of others,
as an employee, officer, agent, consultant, or independent contractor, or in any
other capacity which
CORAM EMPLOYMENT AGREEMENT
Page 7 of 12
involves duties and responsibilities similar to those the Employee has
undertaken for the Company, engage in any Competing Business.
4.4.1 As used in this Agreement, "Restricted Territory" means
Ontario, Canada, and every state within the United States in which the
Company was engaged in business as of Employee's termination date. As
used in this Agreement, "Competing Business" means any business
organization (of whatever form) that is engaged in any business or
enterprise that in whole or in part is the same as, or substantially
the same as, the business of the Company or the Company's research and
development efforts.
4.4.2 The covenants set forth in this Agreement shall be
considered and construed as separate and independent covenants. If, at
the time of enforcement of this Section 4, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum
duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court
shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law.
4.5 MATERIALS AND INVENTIONS. All work performed, and all materials,
products, deliverables, improvements, discoveries, inventions and other subject
matter conceived, developed or prepared by Employee alone or with others, during
the period of Employee's employment with the Company (collectively the
"Materials"), are the property of the Company and all title and interest therein
shall vest in the Company and all Materials shall be deemed to be works made for
hire and made in the course of Employee's employment with the Company. To the
extent that title to any Materials may not, by operation of law, vest in the
Company or such Materials may not be considered works for hire, Employee hereby
irrevocably assigns all right, title and interest therein to the Company.
Employee agrees to give the Company and any person designated by the Company, at
Company's expense, any assistance required to perfect and enforce the rights
defined in this Section 4.5. If Company is unable for any reason whatsoever to
secure Employee's signature to any lawful and necessary documents required to
apply for or execute any patent, copyright or other applications with respect to
such Materials (including renewals, extensions, or continuations thereof),
Employee hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents, and each of them, as Employee's agents and
attorneys-in-fact to act for and on Employee's behalf and instead of Employee,
to execute and file any such application and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights or other
rights thereof with the same legal force and effect as if executed by Employee.
4.5.1 As a matter of record, attached as Exhibit A to this
Agreement is a complete list of all existing Materials relevant to the
subject matter of Employee's employment by the Company to which
Employee claims ownership as of the date of this Agreement, that
Employee desires to specifically exclude from this Agreement, and that
Employee agrees comprise a complete list of such Materials. If nothing
is listed in this Agreement or Exhibit A, Employee represents that he
or she has no such Materials.
CORAM EMPLOYMENT AGREEMENT
Page 8 of 12
4.5.2 Notwithstanding the foregoing, this Agreement does not
require assignment of any Materials which Employee cannot be obligated
to assign under any applicable law of the state in which Employee is
employed by the Company. However, Employee will disclose any Materials
as required by Section 4.5 hereof regardless of whether Employee
believes the Materials to be protected by such statute or regulation in
order to permit the Company to engage in a review process to determine
such issues as may arise. Such disclosure shall be received in
confidence by the Company.
4.6 OBLIGATIONS TO FORMER EMPLOYERS. Employee represents that the
execution of this Agreement, Employee's employment with the Company and
Employee's performance of his or her proposed duties to the Company in the
development of its business, will not violate any obligations Employee may have
to any former employer.
4.7 REMEDIES. The Employee agrees that the covenants contained in
Section 4 of this Agreement are of the essence of this Agreement; that each of
such covenants is reasonable and necessary to protect and preserve the
interests, properties and business of the Company; and that irreparable loss and
damage will be suffered by the Company should the Employee breach any of such
covenants. Therefore, the Employee agrees and consents that, in addition to all
the remedies provided at law or in equity, the Company shall be entitled to a
temporary restraining order and temporary and permanent injunctions to prevent a
breach or contemplated breach of any of the covenants. Except as expressly
provided herein, the existence of any claim, demand, action or cause of action
of the Employee against the Company shall not constitute a defense to the
enforcement by the Company of any of the covenants or agreements herein.
Jurisdiction and venue over any action by the Company to obtain a temporary
restraining order or temporary or permanent injunction to prevent or remedy the
breach by Employee of any of the covenants herein shall be in the United States
District Court for the District of Colorado or in Denver District Court without
regard to conflict of laws.
5. NOTICES.
Any notices, requests, demands and other communications provided for by
this Agreement shall be sufficient if in writing and shall be deemed given when
hand delivered or sent by registered or certified mail to the Employee at the
last address on file with the Company or, in the case of the Company, with its
Legal Department at the Denver, Colorado corporate office.
6. BINDING AGREEMENT.
This Agreement shall be effective as of the date hereof and shall be
binding upon and inure to the benefit of the Employee, Employee's heirs,
personal and legal representatives, guardians and permitted assigns. The rights
and obligations of the Company under this Agreement shall inure to the benefit
of and shall be binding upon any successor of the Company.
7. ENTIRE AGREEMENT.
CORAM EMPLOYMENT AGREEMENT
Page 9 of 12
This Agreement constitutes the entire understanding of the Employee and
the Company with respect to the employment of the Employee and supersedes any
and all prior arrangements, understandings or agreements, whether written or
oral, including Employee's prior Employment Agreement(s), or Confidentiality,
Proprietary Information and Inventions Agreement(s) between the parties or
between Employee and an affiliate, subsidiary, parent or predecessor of the
Company. This Agreement may not be changed, modified or discharged orally, but
only by an instrument in writing signed by the parties.
8. ARBITRATION.
(a) Except for actions brought by the Company pursuant to Subsection
4.7 herein, to the extent permitted by applicable law, any and all other
disputes or controversies arising under or in connection with this Agreement
shall be resolved exclusively by arbitration using one arbitrator in Denver,
Colorado, under the auspices of and in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
then in effect. The agreement set forth herein to arbitrate shall be
specifically enforceable under prevailing arbitration law.
(b) Notice of the demand for arbitration shall be filed in writing with
the other party to this Agreement and with the American Arbitration Association.
The demand for arbitration shall be made within a reasonable time after the
claim, dispute or other matter in question has arisen, and in no event shall it
be made after the date when institution of legal or equitable proceedings based
on such claim, dispute or other matter in question would be barred by the
applicable statute of limitations.
(c) The award rendered by the arbitrator shall be final and judgment
may be entered upon it in accordance with applicable law in any court having
jurisdiction thereof. The findings of fact and conclusions of law of the
arbitrator shall be reduced to writing.
9. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Colorado.
10. SEVERABILITY.
The invalidity or unenforceability of any provisions hereof, including
the terms of any of the Exhibits attached hereto, shall in no way affect the
validity or enforceability of any other provision.
11. TAX WITHHOLDING.
All payments made by the Company to the Employee under this Agreement
shall be subject to applicable federal, state and local tax withholding.
CORAM EMPLOYMENT AGREEMENT
Page 10 of 12
IN WITNESS WHEREOF, the parties knowingly and voluntarily have
executed, sealed and delivered this Agreement as of the date first above
written.
CORAM EMPLOYMENT AGREEMENT
Page 11 of 12
COMPANY:
CORAM, INC.
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------------------------
Title: Chairman of the Board of Directors, Chief
Executive Officer and President
--------------------------------------------
WITNESS: EMPLOYEE:
/s/ XXXX XXXXXX, XX. By: /s/ XXXXX X. XXXXXX
--------------------------------- ---------------------------------
Xxxxx X. Xxxxxx
XXXXX EMPLOYMENT AGREEMENT
Page 12 of 12
EXHIBIT A
The following is a complete list of all existing Inventions or
Improvements pursuant to Section 4 of the Agreement:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
If nothing is listed in this space, I represent I have no Inventions or
Improvements.
