EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into as of this 30th day
of September, 2005, by and among Chronic Care Solutions Holding, Inc., a
Delaware corporation ("Holdings"), CCS Acquisition, Inc., a Delaware corporation
("CCS," and together with Holdings, the "Company"), and Xxxxxx X. Xxxxxx
("Employee").
WITNESSETH:
WHEREAS, Employee is currently employed by DEGC, with such employment
governed by the Prior Agreement; and
WHEREAS, in connection with the transactions contemplated under the
Merger Agreement, Chronic Care Solutions will become a wholly-owned subsidiary
of CCS; and
WHEREAS, in connection with the transactions contemplated under the
Merger Agreement, the Company desires to employ Employee and to enter into an
agreement embodying the terms of such employment (this "Agreement") and Employee
desires to enter into this Agreement and to accept such employment, subject to
the terms and provisions of this Agreement.
Section 1. DEFINITIONS.
(a) "409A Outside Date" shall have the meaning set forth in Section
8(d)(iii) below.
(b) "Accrued Obligations" shall mean (i) all accrued but unpaid Base
Salary through the date of termination of Employee's employment; (ii) any unpaid
or unreimbursed expenses incurred in accordance with Company policy, including
amounts due under Section 7 hereof to the extent incurred prior to termination
of employment; and (iii) any benefits provided under the Company's employee
benefit plans upon a termination of employment, in accordance with the terms
therein, including rights to equity in the Company pursuant to any plan or
grant.
(c) "Affiliate" shall mean, as to any Person, any other Person that
controls, is controlled by, or is under common control with, such Person.
(d) "Agreement" shall have the meaning set forth in the preamble
hereto.
(e) "Annual Bonus" shall have the meaning set forth in Section 4(b)
below.
(f) "Base Salary" shall mean the salary provided for in Section 4(a)
or any increased salary granted to Employee pursuant to Section 4(a) below.
(g) "Board" shall mean the Board of Directors of Holdings.
(h) "Cause" shall mean (i) acts of personal dishonesty, gross
negligence or willful misconduct by Employee in connection with Employee's
employment duties; (ii) failure, neglect or refusal by Employee to perform in
any material respect his duties or responsibilities
under this Agreement; (iii) misappropriation by Employee of the assets or
business opportunities of the Company or its affiliates; (iv) embezzlement or
other financial fraud committed by Employee, at his direction, or with his
personal knowledge; (v) Employee's indictment for, conviction of, admission to,
or entry of pleas of no contest to any felony or any crime involving moral
turpitude; (vi) public or consistent drunkenness by Employee or his illegal use
of narcotics which is, or could reasonably be expected to become, materially
injurious to the reputation or business of the Company or its affiliates or
which impairs, or could reasonably be expected to impair, the performance of
Employee's duties hereunder; or (vii) Employee's breach of any material
provision of this Agreement.
(i) "CCS" shall have the meaning set forth in the preamble hereto.
(j) "Change in Control" shall have the meaning set forth in the
Incentive Plan.
(k) "Chronic Care Solutions" shall mean Chronic Care Solutions, Inc.,
a Delaware corporation.
(l) "Closing Date" shall have the meaning set forth in the Merger
Agreement.
(m) "Company" except as otherwise expressly set forth herein, shall
have the meaning set forth in the preamble hereto.
(n) "Competitive Activities" shall mean any business activities in
which the Company or any of its subsidiaries are engaged (or have committed
plans to engage) during the Term of Employment, or, following termination of
Employee's employment hereunder, was engaged in business (or had committed plans
to engage) at the time of such termination of employment.
(o) "Confidential Information" shall have the meaning set forth in
Section 9(a) below.
(p) "DEGC" shall mean DEGC Enterprises (U.S.), Inc., a Florida
corporation and subsidiary of Chronic Care Solutions.
(q) "Developments" shall have the meaning set forth in Section 9(e)
below.
(r) "Disability" shall mean any physical or mental disability or
infirmity that prevents the performance of Employee's duties for a period of (i)
ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive
days during any twelve (12) month period. Any question as to the existence,
extent or potentiality of Employee's Disability upon which Employee and the
Company cannot agree shall be determined by a qualified, independent physician
selected by the Company and approved by Employee (which approval shall not be
unreasonably withheld). The determination of any such physician shall be final
and conclusive for all purposes of this Agreement.
(s) "Employee" shall have the meaning set forth in the preamble
hereto.
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(t) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(u) "Good Reason" shall mean, without Employee's consent, (i) a
substantial and material diminution in Employee's title, duties or
responsibilities; (iii) any reduction in Base Salary or target Annual Bonus
opportunity (other than an across-the-board reduction applicable to all other
senior executives of the Company); (iv) the relocation of Employee's principal
place of employment (as provided in Section 3(c) hereof) more than fifty (50)
miles from its current location; or (v) any breach by the Company of any
material provision of this Agreement.
(v) "Holdings" shall have the meaning set forth in the preamble
hereto.
(w) "Incentive Plan" shall mean the stock incentive plan established
by Holdings on, or as soon as practicable following, the Closing Date,
containing terms substantially the same as the terms set forth on the Incentive
Plan Term Sheet attached hereto as Exhibit A.
(x) "Interfering Activities" shall mean (i) encouraging, soliciting or
inducing, or in any manner attempting to encourage, solicit or induce, any
Person employed by, as agent of, or a service provider to, the Company or any
subsidiary thereof to terminate (or, in the case of an agent or service
provider, reduce) such Person's employment, agency or service, as the case may
be, with the Company or such subsidiary; provided, that the foregoing shall not
be violated by general advertising not targeted at employees of the Company nor
by serving as a reference upon an employee's request with regard to an entity
with which Employee is not affiliated; or (ii) encouraging, soliciting or
inducing, or in any manner attempting to encourage, solicit or induce any
customer, supplier, licensee or other business relation of the Company or any
subsidiary thereof to cease doing business with or reduce the amount of business
conducted with (including by providing similar services or products to any such
Person) the Company or such subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or such subsidiary.
(y) "Merger Agreement" shall mean that certain Agreement and Plan of
Merger, made and entered into August 30, 2005, among CCS Acquisition, Inc., a
Delaware corporation, Merger Sub and the Company.
(z) "Merger Sub" shall mean CCS Merger Sub, Inc., a Delaware
corporation.
(aa) "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust (charitable or non-charitable), unincorporated organization or other form
of business entity.
(bb) "Prior Agreement" shall mean that certain employment agreement
between Employee and DEGC, dated February 12, 2003.
(cc) "Restricted Area" means any State of the United States of America
or any other jurisdiction in which the Company or its subsidiaries engage (or
have committed plans to engage) in business during the Term of Employment, or,
following termination of Employee's
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employment, was engaged in business (or had committed plans to engage) at the
time of such termination of employment.
(dd) "Restricted Period" shall mean the period commencing on the
Closing Date and ending on the twelve (12) month anniversary of Employee's
termination of employment hereunder for any reason.
(ee) "Severance Multiplier" shall mean an amount equal to one (1).
(ff) "Severance Term" shall mean the twelve (12) month period
following the date of Employee's termination of employment hereunder.
(gg) "Term of Employment" shall mean the period specified in Section 2
below.
(hh) "Time Vested Restricted Stock" shall mean shares of restricted
common stock of Holdings granted to Employee pursuant to the terms of the
Incentive Plan which are designated as "Time Vested Restricted Stock" in
Employee's award agreement.
(ii) "Warburg Investors" shall mean Warburg Pincus Private Equity IX,
L.P. and any other related fund of Warburg Pincus & Co. that holds equity
securities of Holdings.
Section 2. ACCEPTANCE AND TERM OF EMPLOYMENT.
The Company agrees to employ Employee and Employee agrees to serve the
Company on the terms and conditions set forth herein. The Term of Employment
shall commence on the Closing Date and shall continue until Employee is
terminated as provided in Section 8 hereof.
Section 3. POSITION, DUTIES AND RESPONSIBILITIES; PLACE OF
PERFORMANCE.
(a) During the Term of Employment, Employee shall be employed and
serve as the Chief Executive Officer of both Holdings and CCS (together with
such other position or positions consistent with Employee's title as the Board
shall specify from time to time) and shall have such duties typically associated
with such title. Subject to the foregoing, Employee also agrees to serve as an
officer and/or director of the Company or any parent or subsidiary of the
Company, in each case without additional compensation.
(b) Subject to the terms and conditions set forth in this Agreement,
Employee shall devote his full business time, attention, and efforts to the
performance of his duties under this Agreement and shall not engage in any other
business or occupation during the Term of Employment, including, without
limitation, any activity that (x) conflicts with the interests of the Company or
its subsidiaries, (y) interferes with the proper and efficient performance of
his duties for the Company, or (z) interferes with the exercise of his judgment
in the Company's best interests. Notwithstanding the foregoing, nothing herein
shall preclude Employee from (i) serving, with the prior written consent of the
Board, as a member of the board of directors or advisory boards (or their
equivalents in the case of a non-corporate entity) of non-competing businesses
and charitable organizations, (ii) engaging in charitable activities and
community
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affairs, and (iii) subject to the terms and conditions set forth in Section 9
hereof, managing his personal investments and affairs; provided, however, that
the activities set out in clauses (i), (ii) and (iii) shall be limited by
Employee so as not to materially interfere, individually or in the aggregate,
with the performance of his duties and responsibilities hereunder.
(c) Employee's principal place of employment shall be in the Tampa
Bay/Clearwater metropolitan area, although Employee understands and agrees that
he may be required to travel from time to time for business reasons.
Section 4. COMPENSATION. During the Term of Employment, Employee shall
be entitled to the following compensation:
(a) Base Salary. Employee shall be paid an annualized Base Salary,
payable in accordance with the regular payroll practices of the Company, of not
less than $375,000, subject to increase, if any, as may be approved in writing
by the Board, but not to decrease from the then current Base Salary.
(b) Annual Bonus. Employee shall be eligible for an annual incentive
bonus award determined by the Board in respect of each fiscal year during the
Term of Employment (the "Annual Bonus"). The target Annual Bonus for each fiscal
year shall be 100% of Base Salary, with a maximum Annual Bonus of 125% of Base
Salary and a lower amount for lesser achievement. The actual Annual Bonus
payable in respect of each fiscal year shall be based upon the level of
achievement of annual Company and individual performance objectives for such
fiscal year, as determined by the Board and communicated to Employee. The Annual
Bonus shall be paid to Employee at the same time as annual bonuses are generally
payable to other senior executives of the Company, but in no event later than
the date which is two and one-half (2 1/2) months following the end of the
fiscal year to which such Annual Bonus relates.
Section 5. EMPLOYEE BENEFITS.
During the Term of Employment, Employee shall be entitled to
participate in health, insurance, retirement and other perquisites and benefits
generally provided to other senior executives of the Company that are made
available from time to time. Employee shall also be entitled to the same number
of holidays, vacation and sick days as are generally allowed to senior
executives of the Company in accordance with the Company policy in effect from
time to time.
Section 6. "KEY-MAN" INSURANCE.
At any time during the Term of Employment, the Company shall have the
right to insure the life of Employee for the sole benefit of the Company, in
such amounts, and with such terms, as it may determine. All premiums payable
thereon shall be the obligation of the Company. Employee shall have no interest
in any such policy, but agrees to reasonably cooperate with the Company in
taking out such insurance by submitting to physical examinations, supplying all
information reasonably required by the insurance company, and executing all
necessary documents, provided that no financial obligation or liability is
imposed on Employee by any such documents.
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Section 7. REIMBURSEMENT OF BUSINESS EXPENSES.
Employee is authorized to incur reasonable business expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all such reasonable business expenses
incurred in connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy, as in effect from time to
time.
Section 8. TERMINATION OF EMPLOYMENT.
(a) General. The Term of Employment shall terminate upon the earliest
to occur of (i) Employee's death, (ii) a termination by reason of a Disability,
(iii) a termination by the Company with or without Cause, or (iv) a termination
by Employee with or without Good Reason. Upon any termination of Employee's
employment for any reason, except as may otherwise be requested by the Company
in writing and agreed upon in writing by Employee, Employee shall resign from
any and all directorships, committee memberships or any other positions Employee
holds with the Company or any of its subsidiaries.
(b) Termination due to Death or Disability. Employee's employment
shall terminate automatically upon his death. The Company may terminate
Employee's employment immediately upon the occurrence of a Disability, such
termination to be effective upon Employee's receipt of written notice of such
termination. In the event Employee's employment is terminated due to his death
or Disability, Employee or his estate or his beneficiaries, as the case may be,
shall be entitled to:
(i) The Accrued Obligations;
(ii) Any unpaid Annual Bonus in respect to any completed fiscal
year which has ended prior to the date of such termination, such amount to
be paid at the same time it would otherwise be paid to Employee had no such
termination occurred; and
(iii) A pro rata Annual Bonus (determined using the target Annual
Bonus if such termination occurs during the fiscal year in which the
Closing Date falls, or if such fiscal year is a period shorter than twelve
(12) months, during the first full twelve (12) month fiscal year following
the Closing Date, and thereafter, using the Annual Bonus paid or payable
for the immediately prior fiscal year) based on the number of days elapsed
from the commencement of such fiscal year through and including the date of
such termination, such amount to be paid within five (5) business days of
such termination.
Except as set forth in this Section 8(b), following Employee's termination by
reason of his death or Disability, Employee shall have no further rights to any
compensation or any other benefits under this Agreement.
(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect unless the
provisions of this subsection (i) are complied with. Employee shall be
given not less than fifteen
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(15) days written notice by the Board of the intention to terminate his
employment for Cause, such notice to state in detail the particular act or
acts or failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based. Employee shall have fifteen (15)
days after the date that such written notice has been given to Employee in
which to cure such act or acts or failure or failures to act, to the extent
such cure is possible. If he fails to cure such act or acts or failure or
failures to act, the termination shall be effective on the date immediately
following the expiration of the fifteen (15) day notice period. If cure is
not possible, the termination shall be effective on the date of receipt of
such notice by Employee. During any cure period provided hereunder, the
Board may, in its sole and absolute discretion, prohibit Employee from
entering the premises of the Company (or any subsidiary thereof) or
otherwise performing his duties hereunder, and any such prohibition shall
in no event constitute an event pursuant to which Employee may terminate
employment with Good Reason; provided, however, that if cure is possible,
and Employee can reasonably demonstrate to the Board that he desires to
enter the premises of the Company (or a subsidiary thereof) or to otherwise
perform his duties hereunder solely to attempt to cure the act or acts or
failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based, Employee shall be permitted to
enter the premises of the Company (or a subsidiary thereof) or otherwise to
perform his duties hereunder solely for the purposes of curing such act or
acts or failure or failures to act.
(ii) In the event the Company terminates Employee's employment
for Cause, he shall be entitled only to the Accrued Obligations. Following
such termination of Employee's employment for Cause, except as set forth in
this Section 8(c)(ii), Employee shall have no further rights to any
compensation or any other benefits under this Agreement.
(d) Termination by the Company without Cause. The Company may
terminate Employee's employment at any time without Cause, effective upon
Employee's receipt of written notice of such termination. In the event
Employee's employment is terminated by the Company without Cause (other than due
to death or Disability), Employee shall be entitled to:
(i) The Accrued Obligations;
(ii) Any unpaid Annual Bonus in respect to any completed fiscal
year which has ended prior to the date of such termination, such amount to
be paid at the same time it would otherwise be paid to Employee had no such
termination occurred;
(iii) An amount equal to the Severance Multiplier multiplied by
the sum of his then current Base Salary and Annual Bonus (determined using
the target Annual Bonus if such termination occurs during the fiscal year
in which the Closing Date falls, or if such fiscal year is a period shorter
than twelve (12) months, during the first full twelve (12) month fiscal
year following the Closing Date, and thereafter, using the Annual Bonus
paid or payable for the immediately prior fiscal year), such amount to be
payable over the Severance Term in substantially equal installments, on
each regular payroll date of the Company during the Severance Term;
provided, however, that in the event that the payments under this
subsection (iii) are considered "nonqualified deferred
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compensation" under Section 409A of the Internal Revenue Code of 1986, as
amended, if the Severance Term would otherwise expire after the date that
is one day prior to two and one-half (2 1/2) months following the later of
the last day of the Company's fiscal year in which such termination occurs
or the last day of Employee's tax year in which such termination occurs
(the applicable date being, the "409A Outside Date"), Employee shall
receive a lump-sum amount on the 409A Outside Date equal to any portion of
the Severance Amount not previously paid to Employee prior to the 409A
Outside Date in full satisfaction any remaining portion of the amounts
payable under this subsection (iii) not previously paid to Employee prior
to the 409A Outside Date in full satisfaction any remaining portion of the
amounts payable under this subsection (iii);
(iv) Continuation of the health benefits provided to Employee and
his covered dependants under the Company health plans as of the date of
such termination at the same cost applicable to active employees until the
earlier of: (A) the expiration of the Severance Term, or (B) the date
Employee commences employment with any person or entity and, thus, is
eligible for health insurance benefits; provided, however, that as a
condition of continuation of such benefits, the Company may require
employee to elect to continue his health insurance pursuant to COBRA; and
(v) If such termination occurs within the one (1) year period
following a Change in Control, vesting of all shares of Time Vested
Restricted Stock as of the date of such termination.
Notwithstanding the foregoing, the payments and benefits described in
subsections (ii) through (iv) above shall immediately cease, and the Company
shall have no further obligations to Employee with respect thereto, in the event
that Employee breaches any provision of Section 9 hereof.
Following such termination of Employee's employment by the Company
without Cause, except as set forth in this Section 8(d), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.
(e) Termination by Employee with Good Reason. Employee may terminate
his employment with Good Reason by providing the Company fifteen (15) days'
written notice setting forth in reasonable specificity the event that
constitutes Good Reason, which written notice, to be effective, must be provided
to the Company within sixty (60) days of the occurrence of such event. During
such fifteen (15) day notice period, the Company shall have a cure right (if
curable), and if not cured within such period, Employee's termination will be
effective upon the date immediately following the expiration of the fifteen (15)
day notice period, and Employee shall be entitled to the same payments and
benefits as provided in Section 8(d) above for a termination without Cause, it
being agreed that Employee's right to any such payments and benefits shall be
subject to the same terms and conditions as described in Section 8(d) above.
Following such termination of Employee's employment by Employee with Good
Reason, except as set forth in this Section 8(e), Employee shall have no further
rights to any compensation or any other benefits under this Agreement.
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(f) Termination by Employee without Good Reason. Employee may
terminate his employment without Good Reason by providing the Company thirty
(30) days' written notice of such termination. In the event of a termination of
employment by Employee under this Section 8(f), Employee shall be entitled only
to the Accrued Obligations. In the event of termination of Employee's employment
under this Section 8(f), the Company may, in its sole and absolute discretion,
by written notice accelerate such date of termination and still have it treated
as a termination without Good Reason. Following such termination of Employee's
employment by Employee without Good Reason, except as set forth in this Section
8(f), Employee shall have no further rights to any compensation or any other
benefits under this Agreement.
(g) Release. Notwithstanding any provision herein to the contrary, the
Company may require that, prior to payment of any amount or provision of any
benefit pursuant to subsections (d) or (e) of this Section 8, Employee shall
have executed a general release in favor of the Company and its subsidiaries and
related parties in the form as is reasonably required by the Company, and any
waiting periods contained in such release shall have expired.
Section 9. RESTRICTIVE COVENANTS. Employee acknowledges and agrees
that (A) the agreements and covenants contained in this Section 9 are (i)
reasonable and valid in geographical and temporal scope and in all other
respects, and (ii) essential to protect the value of the Company's business and
assets, and (B) by his employment with the Company, Employee will obtain
knowledge, contacts, know-how, training and experience and there is a
substantial probability that such knowledge, know-how, contacts, training and
experience could be used to the substantial advantage of a competitor of the
Company and to the Company's substantial detriment. For purposes of this Section
9, references to the Company shall be deemed to include Holdings, CCS and their
respective subsidiaries.
(a) Confidential Information. At any time during and after the end of
the Term of Employment, without the prior written consent of the Board, except
to the extent required by an order of a court having jurisdiction or under
subpoena from an appropriate government agency, in which event, Employee shall,
to the extent legally permitted, consult with the Board prior to responding to
any such order or subpoena, and except as he in good faith believes necessary or
desirable in the performance of his duties hereunder, Employee shall not
disclose to or use for the benefit of any third party any confidential or
proprietary trade secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales plans, management
organization information, operating policies or manuals, business plans,
financial records, packaging design or other financial, commercial, business or
technical information (i) relating to the Company, or (ii) that the Company may
receive belonging to suppliers, customers or others who do business with the
Company as a result of his position with the Company (collectively,
"Confidential Information"). Employee's obligation under this Section 9(a) shall
not apply to any information that is in the public domain or hereafter enters
the public domain, in each case without the breach by Employee of this Section
9(a).
(b) Non-Competition. Employee covenants and agrees that during the
Restricted Period, Employee shall not, directly or indirectly, individually or
jointly, own any interest in, operate, join, control or participate as a
partner, director, principal, officer, or agent of, enter into the employment
of, act as a consultant to, or perform any services for any Person
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(other than the Company), that engages in any Competitive Activities within the
Restricted Area. Notwithstanding anything herein to the contrary, this Section
9(b) shall not prevent Employee from acquiring as an investment securities
representing not more than three percent (3%) of the outstanding voting
securities of any publicly-held corporation or from being a passive investor in
any mutual fund, hedge fund, private equity fund or similar pooled account so
long as Employee's interest therein is less than three percent (3%) and he has
no role in selecting or managing investments thereof.
(c) Non-Interference. During the Restricted Period, Employee shall
not, directly or indirectly, for his own account or for the account of any other
Person, engage in Interfering Activities.
(d) Return of Documents. In the event of the termination of Employee's
employment for any reason, Employee shall deliver to the Company all of (i) the
property of the Company, and (ii) the documents and data of any nature and in
whatever medium of the Company, and he shall not take with him any such
property, documents or data or any reproduction thereof, or any documents
containing or pertaining to any Confidential Information.
(e) Works for Hire. Employee agrees that the Company shall own all
right, title and interest throughout the world in and to any and all inventions,
original works of authorship, developments, concepts, know-how, improvements or
trade secrets, whether or not patentable or registerable under copyright or
similar laws, which Employee may solely or jointly conceive or develop or reduce
to practice, or cause to be conceived or developed or reduced to practice during
the Term of Employment, whether or not during regular working hours, provided
they either (i) relate at the time of conception or development to the actual or
demonstrably proposed business or research and development activities of the
Company; (ii) result from or relate to any work performed for the Company; or
(iii) are developed through the use of Confidential Information and/or Company
resources or in consultation with Company personnel (collectively referred to as
"Developments"). Employee hereby assigns all right, title and interest in and to
any and all of these Developments to the Company. Employee agrees to assist the
Company, at the Company's expense (but for no other consideration of any kind),
to further evidence, record and perfect such assignments, and to perfect,
obtain, maintain, enforce, and defend any rights specified to be so owned or
assigned. Employee hereby irrevocably designates and appoints the Company and
its agents as attorneys-in-fact to act for and on Employee's behalf to execute
and file any document and to do all other lawfully permitted acts to further the
purposes of the foregoing with the same legal force and effect as if executed by
Employee. In addition, and not in contravention of any of the foregoing,
Employee acknowledges that all original works of authorship which are made by
him (solely or jointly with others) within the scope of employment and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act (17 USC Sec. 101). To the extent allowed by law,
this includes all rights of paternity, integrity, disclosure and withdrawal and
any other rights that may be known as or referred to as "moral rights." To the
extent Employee retains any such moral rights under applicable law, Employee
hereby waives such moral rights and consents to any action consistent with the
terms of this Agreement with respect to such moral rights, in each case, to the
full extent of such applicable law. Employee will confirm any such waivers and
consents from time to time as requested by the Company.
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(f) Blue Pencil. If any court of competent jurisdiction shall at any
time deem the duration or the geographic scope of any of the provisions of this
Section 9 unenforceable, the other provisions of this Section 9 shall
nevertheless stand and the duration and/or geographic scope set forth herein
shall be deemed to be the longest period and/or greatest size permissible by law
under the circumstances, and the parties hereto agree that such court shall
reduce the time period and/or geographic scope to permissible duration or size.
(g) Incentive Plan Construction. Notwithstanding anything contained in
the Incentive Plan to the contrary, Employee shall not be considered to have
engaged in a "competitive activity" within the meaning of, and for all purposes
under, the Incentive Plan unless such activity would constitute a breach of
subsections (a), (b) or (c) above.
Section 10. BREACH OF RESTRICTIVE COVENANTS.
Without limiting the remedies available to the Company, Employee
acknowledges that a breach of any of the covenants contained in Section 9 hereof
may result in material irreparable injury to the Company or its subsidiaries for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction, without the
necessity of proving irreparable harm or injury as a result of such breach or
threatened breach of Section 9 hereof, restraining Employee from engaging in
activities prohibited by Section 9 hereof or such other relief as may be
required specifically to enforce any of the covenants in Section 9 hereof.
Notwithstanding any other provision to the contrary, the Restricted Period shall
be tolled during any period of violation of any of the covenants in Section 9(b)
or 9(c) hereof and during any other period required for litigation during which
the Company seeks to enforce such covenants against Employee or another Person
with whom Employee is affiliated if it is ultimately determined that Employee
was in breach of such covenants.
Section 11. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.
Employee represents and warrants to the Company that:
(a) Employee's employment will not conflict with or result in his
breach of any agreement to which he is a party or otherwise may be bound;
(b) Employee has not violated, and in connection with his employment
with the Company will not violate, any non-solicitation, non-competition or
other similar covenant or agreement of a prior employer by which he is or may be
bound; and
(c) In connection with Employee's employment with the Company, he will
not use any confidential or proprietary information that he may have obtained in
connection with employment with any prior employer.
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Section 12. TAXES.
The Company may withhold from any payments made under this Agreement
all applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law.
Section 13. MITIGATION; SET OFF.
The Company's obligation to pay Employee the amounts provided and to
make the arrangements provided hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by Employee to the Company or its
affiliates. Employee shall not be required to mitigate the amount of any payment
provided for pursuant to this Agreement by seeking other employment or otherwise
and the amount of any payment provided for pursuant to this Agreement shall not
be reduced by any compensation earned as a result of Employee's other employment
or otherwise.
Section 14. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
(a) The Company. This Agreement shall inure to the benefit of and be
enforceable by, and may be assigned by the Company to, any purchaser of all or
substantially all of the Company's business or assets or any successor to the
Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise). The Company will require in a writing delivered to Employee any such
purchaser, successor or assignee to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase, succession or assignment had taken
place. The Company may make no other assignment of this Agreement or its
obligations hereunder.
(b) Employee. Employee's rights and obligations under this Agreement
shall not be transferable by Employee by assignment or otherwise, without the
prior written consent of the Company; provided, however, that if Employee shall
die, all amounts then payable to Employee hereunder shall be paid in accordance
with the terms of this Agreement to Employee's devisee, legatee or other
designee or, if there be no such designee, to Employee's estate.
(c) No Third-Party Beneficiaries. Except as otherwise set forth in
Section 8(b) or Section 14(b) hereof, nothing expressed or referred to in this
Agreement will be construed to give any Person other than the Company and
Employee any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement; provided, however, the
parties acknowledge that prior to the Closing (as defined in the Merger
Agreement) Merger Sub is intended to be a third party beneficiary of this
Agreement, and this Agreement cannot be amended without the prior written
consent of Merger Sub.
Section 15. WAIVER AND AMENDMENTS.
Any waiver, alteration, amendment or modification of any of the terms
of this Agreement shall be valid only if made in writing and signed by each of
the parties hereto; provided, however, that any such waiver, alteration,
amendment or modification is consented to on the Company's behalf by the Board.
No waiver by either of the parties hereto of their rights hereunder shall be
deemed to constitute a waiver with respect to any subsequent occurrences or
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transactions hereunder unless such waiver specifically states that it is to be
construed as a continuing waiver.
Section 16. SEVERABILITY.
If any covenants or other provisions of this Agreement are found to be
invalid or unenforceable by a final determination of a court of competent
jurisdiction: (a) the remaining terms and provisions hereof shall be unimpaired,
and (b) the invalid or unenforceable term or provision hereof shall be deemed
replaced by a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision hereof.
Section 17. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES THEREOF) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH COUNTRY.
Section 18. DISPUTE RESOLUTION.
Any controversy arising out of or relating to this Agreement or the
breach hereof (other than claims for injunctive relief pursuant to Section 10
hereof) shall be settled by binding arbitration in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
(before a single arbitrator) and judgment upon the award rendered may be entered
in any court having jurisdiction thereof. The costs of any such arbitration
proceedings shall be borne equally by the Company and Employee; provided,
however, that the arbitrator shall have the right to award to the prevailing
party in such arbitration reasonable attorneys' fees and costs expended in the
course of such arbitration or enforcement of the awarded rendered thereunder.
The location for the arbitration shall be in Tampa Bay, Florida. Any award made
by such arbitrator shall be final, binding and conclusive on the parties for all
purposes, and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
Section 19. NOTICES.
(a) Every notice or other communication relating to this Agreement
shall be in writing, and shall be mailed to or delivered to the party for whom
it is intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided, provided that,
unless and until some other address be so designated, all notices or
communications by Employee to the Company shall be mailed or delivered to the
Company at its principal executive office, and all notices or communications by
the Company to Employee may be given to Employee personally or may be mailed to
Employee at Employee's last known address, as reflected in the Company's
records.
(b) Any notice so addressed shall be deemed to be given: (i) if
delivered by hand, on the date of such delivery; (ii) if mailed by courier or by
overnight mail, on the first
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business day following the date of such mailing; and (iii) if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
Section 20. SECTION HEADINGS.
The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof, affect the meaning or interpretation of this Agreement or of any term
or provision hereof.
Section 21. ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding and agreement of
the parties hereto regarding the employment of Employee. This Agreement
supersedes all prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating to the subject matter
of this Agreement, including, without limitation, the Prior Agreement.
Section 22. SURVIVAL OF OPERATIVE SECTIONS.
Upon any termination of Employee's employment, the provisions of
Section 8 through Section 24 of this Agreement (together with any related
definitions set forth in Section 1 hereof) shall survive to the extent necessary
to give effect to the provisions thereof.
Section 23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument. The execution of this Agreement may be
by actual or facsimile signature.
Section 24. CONDITIONAL UPON CLOSING OF TRANSACTIONS.
Notwithstanding any other provisions hereunder, this Agreement is
expressly conditional upon the closing of the transactions contemplated under
the Merger Agreement. In the event such transactions do not close, this
Agreement shall be null and void in any all respects.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
CCS ACQUISITION, INC.
/s/ Xxxx Xxxxxxx
________________________________________
By: Xxxx Xxxxxxx
Title: President
CHRONIC CARE SOLUTIONS HOLDING, INC.
/s/ Xxxx Xxxxxxx
________________________________________
By: Xxxx Xxxxxxx
Title: President
EMPLOYEE
/s/ Xxxxxx X. Xxxxxx
________________________________________
Xxxxxx X. Xxxxxx
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EXHIBIT A
INCENTIVE PLAN TERM SHEET
This Term Sheet is being circulated for discussion purposes only. Neither the
Company nor any participant in the Plan shall have any obligation or liability
to any person unless and until definitive agreements setting forth the terms
described herein and such other terms as the parties may agree are executed and
delivered by the Company and the participant, as applicable.
AWARDS AVAILABLE: Nonqualified Stock Options, Restricted Stock, Other
Stock-based awards
ADMINISTRATION: The Plan will be administered by the Board of
Directors of the Company (the "Board"), or such other
committee of two or more individuals appointed by the
Board (the Board or the committee, being the
"Committee"). The Committee may delegate to officers
or employees of the Company or any of its affiliates,
or committees thereof, the authority to perform such
functions, including but not limited to administrative
functions, as the Committee may determine appropriate.
SHARE RESERVE: A number of shares of common stock of the Company (the
"Stock") representing 13% of the outstanding Stock
immediately following the Closing, calculated on a
fully diluted basis (assuming debt structure as
currently contemplated). Such amount subject to
adjustment (i) in the event of changes in the
outstanding Stock or in the capital structure of the
Company (e.g., by reason of stock dividends, stock
splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations,
combinations, exchanges), (ii) by reason of changes in
applicable law, or (iii) for any other reason which
the Committee determines, in its sole discretion and
acting in good faith, to otherwise warrant equitable
adjustment.
STOCK OPTIONS:
*EXPIRATION DATE: Determined by the Committee on the date of grant, but
no longer than 10 years from the date of grant.
*EXERCISE PRICE: Determined by the Committee on the date of grant, but
not less than the fair market value of the underlying
Stock on the date of grant.
*VESTING: Time Vested Options: Generally comprised of 50% of the
total options granted to a participant. Unless
otherwise determined by the Committee on the date of
grant, Time Vested Options will vest over a 4 year
period, with 25% vesting on the first anniversary of
the date of grant, and the remainder vesting ratably
each month over the remaining 36-month period.
Exit Vested Options: Generally comprised of 50% of the
total options granted to a participant. Exit Vested
Options will vest upon a Change in Control or based
upon the internal rate of return ("IRR") achieved by
the Warburg Investors in connection with such Change
in Control such that for each whole percentage point
that the IRR exceeds 20%, 10% of the Exit Vested
Options shall vest (i.e., achievement of a 30% IRR
will result in full vesting of the Exit Vested
Options). For purposes of determining IRR, percentages
shall be rounded up or down to the nearest whole
percentage. In the case of a partial sale by the
Warburg Investors that does not constitute a Change in
Control, a number of Exit Vested Options will also be
eligible to vest based on the same IRR achievement
requirements as described above, with the number of
Exit
Vested Options eligible to vest being based on the
ratio of equity securities sold by the Warburg
Investors in such sale to the total equity securities
purchased by the Warburg Investors.
*TERMINATION OF If prior to the Expiration Date, a participant's
EMPLOYMENT: employment terminates for any reason other than (A)
for cause, or (B) by reason of the participant's death
or permanent disability, (1) all vesting with respect
to the options cease, (2) any unvested options expire
as of the date of such termination, and (3) any vested
options shall remain exercisable until the earlier of
the Expiration Date or the date that is 90 days after
the date of such termination.
If prior to the Expiration Date, a participant's
employment terminates by reason of the participant's
death or permanent disability, (1) all vesting with
respect to the options cease, (2) any unvested options
expire as of the date of such termination, and (3) any
vested options shall remain exercisable until the
earlier of the Expiration Date or the date that is 12
months after the date of such termination.
If prior to the Expiration Date, a participant's
employment is terminated for cause, all options,
whether or not then vested, will terminate.
RESTRICTED STOCK:
*VESTING: Same as options.
*TERMINATION OF If, prior to the time that the Restricted Stock has
EMPLOYMENT: vested, a participant's terminates for any reason, (i)
all vesting with respect to the Restricted Stock shall
cease, and (ii) as soon as practicable following such
termination, the Company shall repurchase from the
participant, and the participant shall sell, any
unvested shares of Restricted Stock at a purchase
price equal to the original purchase price paid for
the Restricted Stock, or if the original purchase
price is equal to $0, such unvested shares of
Restricted Stock shall be forfeited by the participant
to the Company for no consideration as of the date of
such termination.
For certain identified executives only, the Restricted
Stock award agreement will provide that,
notwithstanding the termination provisions described
above, with respect to Exit Vested Restricted Stock
only, if such executive's employment terminates
following the fifth (5th) anniversary of the Closing
by reason of such executive's death or permanent
disability, or by the Company without cause, such
executive's Exit Vested Restricted Stock to the extent
not previously forfeited or repurchased, shall remain
outstanding as if no such termination of employment
had occurred.
CORPORATE EVENTS: In the event of (i) a merger or consolidation
involving the Company in which the Company is not the
surviving corporation; (ii) a merger or consolidation
involving the Company in which the Company is the
surviving corporation but the holders of shares of
Stock receive securities of another corporation and/or
other property, including cash; (iii) the sale of all
or substantially all of the assets of the Company;
(iv) the reorganization or liquidation of the Company;
or (v) a Change in Control (each, a "Corporate
Event"), in lieu of providing the adjustment of the
Awards, the Committee may, in its discretion, provide
that all outstanding Awards shall terminate as of the
consummation of such Corporate Event, and provide that
holders of Awards will receive a payment in respect of
cancellation of their Awards based on the amount of
the per share
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consideration being paid for the Stock in connection
with such Corporate Event, and in the case of Options
and other Awards with an exercise price or similar
provision, less the applicable exercise price;
provided, however, if the Corporate Event is a Change
in Control, holders of Exit Vested Options and/or Exit
Vested Restricted Stock will only be entitled to
receive payment in respect of cancellation of Exit
Vested Options and/or Exit Vested Restricted Stock
that have either previously vested or would otherwise
vest pursuant to the vesting schedule above in
connection with such Change in Control, and any Exit
Vested Options and/or Exit Vested Restricted Stock
which have not previously vested and would not vest as
a result of such Change in Control shall be forfeited
and cancelled without additional consideration paid to
such holder.
COMPETITIVE ACTIVITIES: In the event that a participant engages in any
competitive activity during the term of such
participant's employment or during the six (6) month
period following such participant's termination of
employment for any reason, the Committee may
determine, in its sole discretion, to (a) require that
all Awards held by such participant to be immediately
forfeited and returned to the Company without
additional consideration, (b) require that all shares
of Stock acquired upon the exercise or vesting of
Awards within the twelve (12) month period prior to
the date of such competitive activity to be
immediately forfeited and returned to the Company
without additional consideration, and (c) to the
extent that such participant received any profit from
the sale of an Award or the Stock underlying an Award
within the twelve (12) month period prior to the date
of such competitive activity, require that such
participant promptly repay to the Company any profit
received pursuant to the such sale.
RESTRICTIONS ON STOCK: To the extent that an option/stock holder is a party
to the Stockholders' Agreement as a result of a cash
investment in the Company (made in connection with
Closing), the restrictions contained in the
Stockholders' Agreement will govern and control.
*PROHIBITION ON Stock acquired pursuant to Award generally may not be
TRANSFERS: transferred or otherwise disposed of prior to the six
months following the date of a qualified public
offering of the Company; provided, however, that, if
the Warburg Investors agree to a lockup covering a
period longer than six months following a qualified
public offering, all participants shall be restricted
from transferring Stock acquired pursuant to Award for
such longer period.
*DRAG-ALONG RIGHT: Upon any sale by the Warburg Investors of 50% or more
of its ownership, the Warburg Investors will have the
right to require a participant to sell along with the
Warburg Investors in such transaction.
*VOTING PROXY: As a condition of the grant of an Award, a participant
shall be required to grant the Warburg Investors a
full voting proxy with respect to all Stock acquired
pursuant to an Award.
*REPURCHASE RIGHTS: If, prior to the date of a qualified public offering,
a participant's employment terminates for any reason
then, at any time thereafter, in addition to any
repurchase right of the Company with respect to
unvested shares of Restricted Stock as provided above,
the Company shall have the right to repurchase the
shares of Stock received pursuant to Awards granted
hereunder at a per share price equal to the Repurchase
Price.
The Repurchase Price will equal (i) the "fair market
value" (as determined by the Board in good faith) on
the date of repurchase, if following a termination of
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a participant's employment other than by the Company
for cause, or (ii) the lesser of (x) the fair market
value on the date of repurchase, or (y) the original
purchase price of the Stock, of following a
termination of a participant's employment by the
Company for cause.
The Repurchase Price will be paid in a lump-sum;
provided, however, that following a termination of a
participant's employment by the Company for cause or
by such participant, the Company shall be permitted to
issue a promissory note in lieu of a lump-sum cash
payment (i) with a maturity date that does not exceed
three years, (ii) that bears simple interest of not
less than the Prime Rate, and (iii) is payable as to
interest in equal monthly installments during the term
of the note and as to principal on the maturity date.
The Company shall be permitted to assign the
Repurchase Right to the Warburg Investors.
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