Exhibit 10.27
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of October,
1998, by and between OPTION CARE, INC., a Delaware corporation (the "Company")
and XXXXXXX X. XXXXXX ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. EMPLOYMENT. Throughout the Term (as defined in Section 2 below), the
Company shall employ Executive as provided herein, and Executive hereby
accepts such employment. In accepting such employment, Executive states
that, to the best of his knowledge, he is not now, and by accepting such
employment, will not be, under any restrictions in the performance of the
duties contemplated under this Agreement as a result of the provisions of
any prior employment agreement or non-compete or similar agreement to
which Executive is or was a party.
2. TERM OF EMPLOYMENT. The term of Executive's employment by the Company
hereunder shall commence on October 1, 1998 (the "Effective Date") and
shall continue thereafter unless sooner terminated as a result of
Executive's death or in accordance with the provisions of Section 7 below
(the "Term").
3. DUTIES. Throughout the Term, and except as otherwise expressly provided
herein, Executive shall be employed by the Company as the President and
Chief Executive Officer ("CEO") of the Company. In such capacity,
Executive shall devote his full time to the performance of his duties as
President and CEO of the Company in accordance with the Company's
By-laws, this Agreement and the directions of the Company's Board of
Directors. Without limiting the generality of the foregoing, throughout
the Term Executive shall faithfully perform his duties as President and
CEO at all times so as to promote the best interests of the Company.
4. COMPENSATION.
(a) SALARY. For any and all services performed by Executive under this
Agreement during the Term, in whatever capacity, the Company shall
pay to Executive an
annual salary of Two Hundred Ten Thousand Dollars ($210,000) per
year (the "Salary") less any and all applicable federal, state and
local payroll and withholding taxes. The Salary shall be paid in
the same increments as the Company's normal payroll, but no less
frequent than monthly and prorated, however, for any period of
less than a full month. The Salary will be reviewed annually by
the Compensation Committee of the Board and a determination shall
be made at that time as to the appropriateness of an increase, if
any, thereto.
(b) BONUS. In addition to the Salary, Executive shall be eligible to
receive from the Company a discretionary incentive compensation
bonus (the "Bonus") in an amount of up to forty percent (40%) of
his Salary. The amount of the Bonus, if any, shall be determined
by the Board of Directors based on the achievement by the Company
of certain specific strategic plans and goals (the "Performance
Goals") during the preceding calendar year (the "Measurement
Period") as shall be established by the Board in consultation with
the Executive. The initial Performance Goals will be established
by the Board within ninety (90) days of Executive's employment
hereunder. Thereafter, the Performance Goals for each Measurement
Period shall be established as promptly as possible in each such
Measurement Period, with the expectation that the Performance
Goals be in place each year prior to distribution of the Company's
annual proxy materials. Following each Measurement Period, the
Compensation Committee of the Board shall review the Performance
Goals for the prior Measurement Period in light of the Company's
actual performance during such Measurement Period as reflected on
the Company's audited financial statements to determine the amount
of Bonus payable to Executive. Payment of each year's Bonus, if
any, shall be made at the earlier of forty-five (45) days after
the Company's performance for the Measurement Period is
established on the basis of the Company's audited financial
statements or April 15th.
5. BENEFITS AND OTHER RIGHTS. In consideration for Executive's performance
under this Agreement, the Company shall provide to Executive the
following benefits:
(a) The Company will provide Executive with cash advances for or
reimbursement of all reasonable out-of-pocket business expenses
incurred by Executive in connection with his employment hereunder;
provided, Executive adheres to any and all policies established by
Company from time to time with respect to such reimbursements or
advances, including, but not limited to, a requirement that
Executive submit supporting evidence of any such expenses to the
Company.
(b) The Company will provide Executive with a monthly car allowance in
the amount of Five Hundred Dollars ($500.00) subject to standard
payroll withholding for taxes.
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(c) The Company will provide Executive and his family with group
medical coverage under the terms of the Company's health insurance
plan, but subject to completion of normal waiting periods. During
any such waiting period, or in the event that at the date of this
Agreement the Company's group medical coverage is not yet in
effect, then, in either case, the Company will pay, or reimburse
Executive for, the cost of COBRA coverage for Executive and his
family under his prior health plan.
(d) During the Term the Executive shall be entitled to four (4) weeks
paid vacation, it being understood and agreed that, for the
purposes of this Agreement, up to one-half of all unused vacation
may be carried over from one year to the next.
6. OPTIONS. The Company shall grant to Executive options pursuant to the
Option Care, Inc. Amended and Restated Incentive Plan (1997) (the "Option
Plan"), as amended, to purchase 100,000 shares of the Company's common
stock at an option exercise price of $0.75 per share of common stock (the
"Options") which was the fair market value (as determined under the
Option Plan) of the Company's common stock as of October 12, 1998, which
date shall be the date of grant of the Options for purposes of the Option
Plan (the "Date of Grant"). The Options shall vest in equal installments
of 25,000 Options per year on each of the first four anniversaries of the
Date of Grant. The Options shall not be exercisable subsequent to the
date ten (10) years after the Date of Grant. In all other respects the
Options shall be governed by the terms and conditions of the Option Plan.
7. TERMINATION OF THE TERM.
(a) The Company shall have the right to terminate the Term, effective
upon delivery of written notice of termination to Executive
setting forth the basis of such termination, under the following
circumstances:
(i) Executive shall die; or
(ii) With or without "Cause" (as herein defined).
A termination for "Cause" is a termination evidenced by a finding
adopted in good faith by the Board of Directors that Executive (i)
willfully and continually failed to substantially perform his
duties with the Company (other than a failure resulting from
Executive's incapacity due to illness, physical or mental
disability or other incapacity) and such failure continues after
the Board has given written notice to Executive providing a
reasonable description of the basis for the determination that
Executive has failed to perform his duties, (ii) has been
convicted of a felony, (iii) has breached this Agreement in any
material respect if such breach is not cured or remedied
reasonably promptly after the Board has
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given written notice to Executive providing a reasonable
description of the breach, or (iv) engaged in conduct constituting
willful malfeasance in connection with his employment which is
materially and demonstrably injurious to the Company and its
subsidiaries taken as a whole. No act, or failure to act, on
Executive's part, shall be considered "willful" for purposes of
(i) or (iv) above unless he has acted or failed to act with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interests of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after Notice of
Termination (as herein after defined) is given by Executive shall
constitute Cause for purposes of this Agreement.
(b) This Agreement may be terminated by the Executive at any time upon
ninety (90) days prior written notice to the Company.
(c) Following a "Change of Control" (as hereinafter defined),
Executive may terminate his employment for "Good Reason" (as
hereinafter defined). For purposes of this Agreement, Good Reason
shall mean the occurrence after a Change of Control of any of the
events or conditions described in Subsections (i) through (iii)
below:
As used in this Section 7(c), the term "Company" shall also refer
to its successor entity or any entity which has acquired control
of the Company:
(i) Executive no longer serving as President and Chief
Executive Officer of the Company, or the assignment to
Executive of any duties or responsibilities which are
inconsistent with the status, title, position or
responsibilities of President and Chief Executive Officer
of the Company (which assignment is not rescinded after the
Company receives written notice from Executive providing a
reasonable description of such inconsistency);
(ii) the Company's requiring Executive to be based at any place
outside a 50 mile radius from the principal location from
which Executive served as an employee of the Company
immediately prior to the Change in Control, except for
reasonably required travel on the Company's business which
is not materially greater than such travel requirements
prior to the Change in Control;
(iii) the failure by the Company to provide Executive with
compensation and benefits substantially comparable, in the
aggregate, to those provided for under the employee benefit
plans, programs and practices in effect immediately prior
to the Change in Control;
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(d) NOTICE OF TERMINATION. Any purported termination of Executive's
employment hereunder by the Company or by Executive shall be
communicated by a written Notice of Termination to the other. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which indicates the specific termination provision in this
Agreement relied upon as a basis for termination. For purposes of
this Agreement, no such purported termination of employment shall
be effective without such Notice of Termination.
(e) TERMINATION DATE. "Termination Date" shall mean in the case of
Executive's death, his date of death, or in all other cases, the
date specified in the Notice of Termination; provided, however,
that if Executive terminates his employment for Good Reason, the
date specified in the Notice of Termination shall not be less than
30 days from the date the Notice of Termination is given to the
Company and if the Company terminates Executive's employment other
than for Cause, the date specified in the Notice of Termination
shall be not less than 30 days from the date the Notice of
Termination is given to Executive.
(f) CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean the occurrence of any of the following events:
(a) a merger, consolidation or reorganization of the Company in
which the Company does not survive as an independent entity; (b) a
sale of all or substantially all of the assets of the Company; (c)
the first purchase of shares of common stock of the Company
pursuant to a tender or exchange offer for more than a majority of
the Company's outstanding shares of common stock by any person
other than Xxxx Xxxxxx; or (d) any change in control of a nature
that, in the opinion of the Board of Directors, would be required
to be reported under the federal securities laws; provided that
such a change in control shall be deemed to have occurred if (i)
any person, other than Xxxx Xxxxxx, is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing at least a majority of the combined voting power of
the Company's then outstanding securities; or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company
cease for any reason to constitute a majority thereof unless the
election of any director, who was not a director at the beginning
of the period, was approved by a vote of at least 70% of the
directors then still in office who were directors at the beginning
of the period.
8. COMPENSATION UPON TERMINATION. Upon termination of Executive's employment
during the Term, Executive shall be entitled to the following benefits:
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(a) If Executive's employment is terminated by the Company for Cause
or by Executive (other than for Good Reason), the Company shall
pay to Executive all amounts earned or accrued hereunder through
the Termination Date but not paid as of the Termination Date,
including (i) Salary through the Termination Date, (ii)
reimbursement (in accordance with the terms of this Agreement) for
any and all monies advanced or expenses incurred in connection
with Executive's employment for reasonable and necessary expenses
incurred by Executive on behalf of the Company for the period
ending on the termination Date, (iii) accrued but unpaid vacation
pay, (iv) any previously awarded and vested, but unpaid, bonus or
incentive compensation and (v) any previous compensation which
Executive has previously deferred (including any interest earned
or credited thereon) (collectively, "Accrued Compensation").
Executive's entitlement to any other benefits shall be determined
in accordance with the Company's employee benefit plans and other
applicable programs and practices then in effect, including but
not limited to the plan described in Section 3(d) hereof, and all
unvested stock options shall be forfeited.
(b) Subject to the last sentence of Section 8(c), if Executive's
employment is terminated by the Company prior to a Change in
Control for any reason other than for Cause or death, the Company
shall pay to Executive all Accrued Compensation plus any Bonus or
portion thereof which would be payable if Executive's employment
had continued because the performance targets relating thereto had
been achieved as of the Termination Date ("Earned Bonus"), and an
amount equal to one year's Salary payable in twenty-four (24)
equal installments on the same schedule as the Company shall pay
its regular payroll to employees. In addition, Executive shall
receive for a period of twelve (12) months from the Termination
Date, medical, dental and hospitalization benefits which Executive
would have been entitled to receive if he had continued his
employment with the Company on the terms and conditions applicable
to other executive officers of the Company as in effect from time
to time during such period Executive's entitlement to any other
benefits, including, but not limited to, exercise of Options,
shall be determined in accordance with the Company's employee
benefit plans and other programs and practices then in effect,
including but not limited to the plan described in Section 6
hereof.
(c) If Executive's employment by the Company is terminated by the
Company following a Change in Control other than for Cause or
death, or the Executive terminates his employment for Good Reason,
then Executive
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shall be entitled to the benefits provided below:
(1) The Company shall pay Executive the sum of:
(A) all Accrued Compensation; and
(B) forty percent (40%) of the Executive's Salary,
prorated for the percentage of the current calendar
year measured through the Termination Date.
The sum of the amounts described in Clauses (A) and (B)
shall be hereinafter referred to as the "Accrued
Obligations"; and
(2) The amount equal to the product of (2) two times the
Executive's Annual Base Salary (which shall be increased
for this purpose by any Section 401(k) deferrals, cafeteria
plan elections, or other deferrals that would have
increased Executive's Salary if paid in cash to Executive
when earned).
9. EFFECT OF EXPIRATION OR TERMINATION OF THE TERM. Promptly following the
termination of the Term, and except as provided in Section 7 or as
otherwise expressly agreed by the Company, Executive shall
(a) provide the Company with all reasonable assistance necessary to
permit the Company to continue its business operations without
interruption and in a manner consistent with reasonable business
practices; provided, however, that such transition period shall
not exceed sixty (60) days after termination nor require more than
twenty (20) hours of Executive's time per week. In the event that
the Company shall request Executive to provide transitional
assistance after the effective date of termination, Executive
shall be paid at any hourly rate based on an 8 hour work day, a
2,080 hour work year and his last Salary, based upon time sheets
submitted by Executive specifying the services performed and the
amount of time expended;
(b) deliver to the Company possession of any and all property owned or
leased by the Company which may then be in Executive's possession
or under his control, including without limitation any and all
such keys, credit cards, automobiles, equipment, supplies, books,
records, files, computer equipment, computer software and other
such tangible and intangible property of any description
whatsoever. If, following the expiration or termination of the
Term, Executive shall receive any mail addressed to the Company,
then Executive shall
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immediately deliver such mail, unopened and in its original
envelope or package, to the Company; and
(c) Other than as provided in Section 7, upon a termination of
employment all other benefits and/or entitlements to participate
in programs or benefits, if any, will cease as of the effective
date medical insurance coverage at his own expense as provided by
applicable law or written Company policy.
10. RESTRICTIVE COVENANTS FOR EXECUTIVE. Executive hereby covenants and
agrees with the Company that for so long as Executive is employed by the
Company and for a period (the "Restricted Period") of twelve (12) months
thereafter (but for eighteen (18) months thereafter if the Executive
voluntarily terminates employment under Section 7(b)) Executive shall
not, without the prior written consent of the Company, which consent
shall be within the sole and exclusive discretion of the Company, either
directly or indirectly, on his own account or as an Executive,
consultant, agent, partner, joint venturer, owner, officer, director or
shareholder of any other person, firm, corporation, partnership, limited
liability company or other entity, or in any other capacity, in any way:
(a) Carry on, be engaged in or have any financial interest in any
business which is in competition with the business of the Company.
For purposes of this Section 10, a business shall be deemed to be
in competition with the Company if it involves the home healthcare
business, either directly or as a franchisor, by providing
infusion therapy or research and development work involving
products or fields of research which are under study by the
Company at the Termination Date. Nothing in this Section 10 shall
be construed so as to preclude Executive from investing in any
publicly held company, provided Executive's beneficial ownership
of any class of such company's securities does not exceed 5% of
the outstanding securities of such class;
(b) solicit any current supplier, customer or client of the Company or
any affiliate of the Company or anyone who was a supplier,
customer or client at any time during the immediately preceding
twelve (12) month period; or
(c) solicit, employ or engage any person who was an Executive of the
Company or any affiliate of the Company at any time during the
immediately preceding twelve (12) month period.
11. CONFIDENTIALITY. The Executive acknowledges that during the period of his
employment by the Company, and in his performance of services hereunder,
he will be placed in a relationship of trust and confidence regarding the
Company and its affairs. In the course of and due to that relationship he
will have contact with the Company's customers,
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suppliers, affiliates, and distributors and their personnel. In the
course of the aforesaid relationship, he will have access to and will
acquire confidential information relating to the business and operations
of the Company, including, without limitation, information relating to
processes, plans and methods of operation of the Company. The Executive
acknowledges that any such information that is not a trade secret,
nonetheless constitutes confidential information as between himself and
the Company, that the disclosure thereof (or of any information which he
knows relates to confidential, trade, or other secret aspects of the
Company's business) would cause substantial loss to the goodwill of the
Company, and will continue to be made known to Executive only because of
the position of trust and confidence which he will continue to occupy
hereunder. In view of the foregoing, and in consideration of the
covenants and premises of this Agreement, the Executive agrees that he
will not, at any time during the term of his employment, and for a period
of twelve months thereafter, disclose to any person, firm or company any
trade secrets or confidential information or such ideas which he may have
acquired or developed or may acquire or develop relating to the Business
of the Company while serving the Company as an Executive.
12. REMEDIES.
(a) The covenants of Executive set forth in Sections 10 and 11 are
separate and independent covenants for which valuable
consideration has been paid, the receipt, adequacy and sufficiency
of which are acknowledged by Executive, and have also been made by
Executive to induce the Company to enter into this Agreement. Each
of the aforesaid covenants may be availed of, or relied upon, by
the Company in any court of competent jurisdiction, and shall form
the basis of injunctive relief and damages including expenses of
litigation (including, but not limited to, reasonable attorney's
fees upon trial and appeal) suffered by the Company arising out of
any breach of the aforesaid covenants by Executive. The covenants
of Executive set forth in this Section 12 are cumulative to each
other and to all other covenants of Executive in favor of the
Company contained in this Agreement and shall survive the
termination of this Agreement for the purposes intended.
(b) Each of the covenants contained in Sections 10 and 11 above shall
be construed as agreements which are independent of any other
provision of this Agreement, and the existence of any claim or
cause of action by any party hereto against any other party
hereto, of whatever nature, shall not constitute a defense to the
enforcement of such covenants. If any of such covenants shall be
deemed unenforceable by virtue of its scope in terms of
geographical area, length of time or otherwise, but may be made
enforceable by the imposition of limitations thereon, Executive
agrees that the same shall be enforceable to the fullest extent
permissible under
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the laws and public policies of the jurisdiction in which
enforcement is sought. The parties hereto hereby authorize any
court of competent jurisdiction to modify or reduce the scope of
such covenants to the extent necessary to make such covenants
enforceable.
13. ENFORCEMENT COSTS. If any legal action or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provisions of
this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees, court costs and all
expenses even if not taxable as court costs (including, without
limitation, all such fees, costs and expenses incident to appeal and
other post-judgment proceedings), incurred in that action or proceeding,
in addition to any other relief to which such party or parties may be
entitled. Attorney's fees shall include, without limitation, paralegal
fees, investigative fees, administrative costs, sales and use taxes and
all other charges billed by the attorney to the prevailing party.
14. NOTICES. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return receipt
requested, or guaranteed overnight delivery by a nationally
recognized express delivery company, in each case addressed
to the intended recipient at the address set forth below.
(c) For notices sent to the Company:
Option Care, Inc.
000 Xxxxxxxxx Xxxxx - Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(d) For notices sent to Executive:
Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
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Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other
party hereto as provided herein. Any notice sent by certified mail as
provided above shall be deemed delivered on the third (3rd) business day
next following the postmark date which it bears.
15. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof, and all prior
negotiations, agreements and understandings are merged herein. This
Agreement may not be modified or revised except pursuant to a written
instrument signed by the party against whom enforcement is sought.
16. SEVERABILITY. The invalidity or unenforceability of any provision hereof
shall not affect the enforceability of any other provision hereof, and
except as otherwise provided in Section 12 above, any such invalid or
unenforceable provision shall be severed from this Agreement.
17. WAIVER. Failure to insist upon strict compliance with any of the terms or
conditions hereof shall not be deemed a waiver or such term or condition,
and the waiver or relinquishment of any right or remedy hereunder at any
one or more times shall not be deemed a waiver or relinquishment of such
right or remedy at any other time or times.
18. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with the
laws of the State of Illinois, without regard to its conflicts of laws
provisions. Each party hereto hereby (a) agrees that any litigation which
may be initiated with respect to this Agreement or to enforce rights
granted hereunder shall be initiated in a court located in Xxxx County,
Illinois and (b) consents to personal jurisdiction of such courts for
such purpose.
19. BENEFIT AND ASSIGNABILITY. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The
rights and obligations of Executive hereunder are personal to him, and
are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
OPTION CARE, INC.
By: _______________________________
Its: ______________________________
EXECUTIVE:
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XXXXXXX X. XXXXXX
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