Exhibit 10.28
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement"), made as of the 9th day of
October, 2002, is entered into by VistaCare, Inc., a Delaware corporation with
its principal place of business at 0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxxx, an individual
residing at 00000 Xxxx 000xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Executive").
Recitals:
WHEREAS, the Executive is an executive officer of the Company; and
WHEREAS, the Company and the Executive wish to provide for certain
payments and benefits to the Executive in the event the Executive's employment
by the Company is terminated under certain circumstances or there is a change in
control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Definitions. As used in this Agreement the following terms shall have
the following respective meanings:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" shall mean: (i) the Executive's willful failure to
attempt in good faith to follow the legal written directions of the Board, which
is not cured within ten (10) days following receipt by the Executive of written
notice from the Board specifying the details thereof, (ii) the Executive's
conviction of a felony (other than a felony involving a traffic violation or as
a result of vicarious liability), (iii) the Executive's commission of an act
constituting fraud, embezzlement, larceny or theft with regard to the Company
that is of a material nature (other than good faith expense account
reimbursement disputes) or (iv) willful misconduct by the Executive with regard
to the Company that has a material adverse effect on the Company. For purposes
of this definition, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done or omitted to be done by him not in good faith
and without reasonable belief that his action or omission was in the best
interests of the Company.
(c) "Change in Control" means (i) the acquisition by a person, party
or a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended) of outstanding capital stock of the Company
representing more than 50% of the combined voting power of all voting securities
of the Company entitled to vote generally in the election of directors,
excluding acquisitions from the Company, (ii) a change of a majority of the
Board, without the approval or consent of the members of the Board before such
change, (iii) the acquisition of the Company by means of a reorganization,
merger, consolidation,
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recapitalization or asset sale, unless the owners of the capital stock of the
Company immediately before such transaction continue to own, in substantially
the same proportions as before such transaction, capital stock of the acquiring
or succeeding entity representing more than 50% of the combined voting power of
all voting securities of such acquiring or succeeding entity entitled to vote
generally in the election of directors, or (iv) the approval of a liquidation or
dissolution of the Company.
(d) "Confidential Information" means all trade secrets and other
information of a business, financial, marketing, technical or other nature
pertaining to the Company or any of its subsidiaries or affiliates, including
information of others that the Company or any of its subsidiaries or affiliates
has agreed to keep confidential; provided, that Confidential Information shall
not include any information that has entered or enters the public domain through
no fault of the Executive, was known by the Executive prior to the Executive's
affiliation with or employment by the Company or which the Executive is required
to disclose by legal process.
(e) "Disability" means the failure of the Executive, due to physical
or mental disability, to perform the services reasonably contemplated by his
position for a period of either (i) ninety (90) consecutive days or (ii) one
hundred twenty (120) days, whether or not consecutive, during any 360-day
period.
(f) "Good Reason" means any of the following events (unless
consented to by the Executive in writing): (i) a material diminution in the
Executive's duties, responsibilities or the assignment to the Executive of
duties or responsibilities that are inconsistent in a material and adverse way
with his then position; (ii) a reduction in the Executive's base salary; (iii) a
requirement by the Company that the Executive's principal place of work be moved
to a location more than thirty-five (35) miles away from Scottsdale, Arizona; or
(iv) a change in the Executive's title to a lesser title.
(g) "Per-Share Equity Value" means (i) the total amount of cash and
the fair market value of all other property paid directly or indirectly by an
acquiror to the Company and/or its equity security holders in connection with a
Sale of the Company, divided by (ii) the total number of outstanding shares of
the Company's Class A Common Stock, $.01 par value per share (the "Common
Stock"), immediately before the closing of a Sale of the Company transaction,
assuming the conversion of all shares of capital stock convertible into the
Company and the exercise of all warrants, options and other rights to purchase
the Common Stock. The value of any securities issuable in connection with a Sale
of the Company (whether debt or equity) freely tradable in an established public
market will be determined on the basis of the last closing price in such market
five (5) days prior to the consummation of the Sale of the Company (the
"Valuation Date"), and the value of securities not freely tradable (or having no
established market) or other property will be the fair market value of such
securities or other property on such Valuation Date as determined in good faith
by the Board.
(h) "Sale of the Company" means (i) the acquisition by a person,
party or a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of outstanding capital stock of the
Company representing more than 50% of the combined voting power of all voting
securities of the Company entitled to vote generally in
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the election of directors, excluding acquisitions from the Company, or (ii) the
acquisition of the Company by means of a reorganization, merger, consolidation,
recapitalization or asset sale, unless the owners of the capital stock of the
Company immediately before such transaction continue to own, in substantially
the same proportions as before such transaction, capital stock of the acquiring
or succeeding entity representing more than 50% of the combined voting power of
all voting securities of such acquiring or succeeding entity entitled to vote
generally in the election of directors.
2. Employment At-Will Acknowledgement. The Executive acknowledges and
agrees that his employment by the Company is "at-will" and as such may be
terminated by the Company at any time, with or without cause, subject to the
provisions of this Agreement.
3. Compensation Upon Termination of Employment Prior to Change in Control.
If prior to a Change in Control the Executive's employment by the Company is
terminated by the Company for any reason other than Cause or the Executive's
death or Disability or is terminated by the Executive for Good Reason, the
Company shall:
(a) pay to the Executive within five (5) days after the date of his
employment termination all accrued but unpaid salary, bonus and vacation pay, if
any;
(b) continue to pay to the Executive his then current salary in
bi-weekly installments until the first anniversary of his employment
termination;
(c) continue to provide the Executive until the first anniversary of
his employment termination date with the health and life insurance benefits he
would have received had his employment by the Company not terminated or
substantially the equivalent coverage (or the full value thereof in cash); and
(d) promptly reimburse the Executive for any and all legal fees and
expenses incurred by him to enforce the provisions of this Agreement.
4. Compensation Upon Termination of Employment After Change in Control. If
within two (2) years following a Change in Control the Executive's employment by
the Company is terminated for any reason (including death, disability or
voluntary resignation) other than by the Company for Cause, the Company shall:
(a) pay to the Executive within five (5) days after the date of his
employment termination all accrued but unpaid salary, bonus and vacation pay, if
any;
(b) pay to the Executive (or his estate, in the case of the
Executive's death) within thirty (30) days after the date of his employment
termination a lump sum amount equal to three times his then current annual
salary;
(c) continue to provide the Executive for three (3) years after the
date of his employment termination with the health and life insurance benefits
he would have received had
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his employment by the Company not terminated or substantially the equivalent
coverage (or the full value thereof in cash); and
(d) promptly reimburse the Executive for any and all legal fees and
expenses incurred by him to enforce the provisions of this Agreement.
5. Acceleration of Option Vesting. Upon a Change in Control, regardless of
whether the Executive's employment is terminated, the vesting of all options
granted by the Company to the Executive to purchase shares of the Company's
capital stock shall be accelerated in full.
6. Transaction Fee. (a) If there is a Sale of the Company prior to
December 31, 2006, the Executive shall be entitled to a fee (a "Transaction
Fee") equal to the amount specified in the table below corresponding to the date
on which such transaction closes; provided, however, that no Transaction Fee
shall be payable if the Per-Share Equity Value is less than $5.00 (appropriately
adjusted for stock splits, combinations, stock dividends, recapitalizations and
the like affecting the Common Stock) or if the Executive is not employed by the
Company on the closing date of such transaction (other than as a result of being
terminated without Cause by the Company (A) within six (6) months prior to such
closing date or (B) within twelve (12) months prior to such closing if a
definitive agreement with respect to the transaction had been executed at the
time of such termination).
9/30/02 - 12/31/02 $5,000,000
1/1/03 - 12/31/03 $4,000,000
1/1/04 - 12/31/04 $3,000,000
1/1/05 - 12/31/05 $2,000,000
1/1/06 - 12/31/06 $1,000,000
(b) If the terms of a transaction constituting a Sale of the Company
provide for escrowed, contingent or installment payments, the portion of the
Transaction Fee relating to such payments shall be paid if and when such
payments are actually received by the security holders and/or the Company.
(c) The Transaction Fee shall be payable in the same form and in the
same proportion as the consideration received by the Company and/or its security
holders in connection with the Sale of the Company.
7. Confidentiality. (a) The Executive will not at any time, directly or
indirectly, disclose or divulge, except as required in connection with the
performance of the Executive's duties for the Company, any Confidential
Information acquired by the Executive during or in connection with the
Executive's affiliation with or employment by the Company.
(b) The Executive shall make no use whatsoever, directly or
indirectly, of any Confidential Information, except as required in connection
with the performance of the Executive's duties for the Company.
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(c) Upon the Company's request at any time and for any reason, the
Executive shall immediately deliver to the Company all materials (including all
copies) in the Executive's possession which contain or relate to Confidential
Information.
8. Non-competition and Non-solicitation. The Executive agrees that prior
to the termination of the Executive's employment with the Company for whatever
reason, and thereafter for two years:
(a) the Executive will not directly or indirectly, individually or
as a consultant to, or employee, officer, director, stockholder, partner or
other owner of or participant in any business entity other than the Company,
engage in or assist any other person to engage in the business of providing
hospice services in competition with the Company or any of its subsidiaries; and
(b) the Executive will not directly or indirectly, individually or
as a consultant to, or employee, officer, director, stockholder, partner or
other owner of or participant in any business entity other than the Company,
solicit or hire from the Company or any of its subsidiaries or affiliates, or
otherwise materially interfere with the business relationship of the Company or
any of its subsidiaries or affiliates with, (i) any person who is, or was within
the six-month period immediately prior to the termination of the Executive's
employment with the Company, employed by or associated with the Company or any
of its subsidiaries or affiliates or (ii) any person or entity who is, or was
within the six-month period immediately prior to the termination of the
Executive's employment with the Company, a patient referral source for the
Company or any of its subsidiaries or affiliates. Notwithstanding anything
contained herein to the contrary, the Executive shall not be prohibited from
soliciting or hiring Xxxxxxx Xxxxx, Xxx Xxxxx or Xxx Xxxxx.
9. Remedies. Without limiting the remedies available to the Company, the
Executive acknowledges that a breach of any of the covenants contained in
Sections 7 and 8 herein could result in irreparable injury to the Company for
which there might be no adequate remedy at law, 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 injunction and a permanent injunction
restraining the Executive from engaging in any activities prohibited by Sections
7 and 8 herein or such other equitable relief as may be required to enforce
specifically any of the covenants of Sections 7 and 8 herein. The foregoing
provisions of Sections 7 and 8 herein shall survive the termination of this
Agreement and shall continue thereafter in full force and effect in accordance
with the terms of Sections 7 and 8 herein for the periods of time contemplated
thereby.
10. Release. It shall be a condition of the Company's obligation to make
the payments and provide the benefits contemplated by Sections 3 and 4 that the
Executive execute and deliver to the Company a release in form and substance
satisfactory to the Company pursuant to which the Executive unconditionally and
irrevocably waives, relinquishes and forever releases and discharges the Company
and its officers, directors, shareholders, employees, agents, subsidiaries,
affiliates, predecessors, successors and assigns (collectively, the "Company
Indemnitees") from any and all claims, duties, causes of actions, demands,
obligations, liabilities,
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rights, damages (including business, punitive or exemplary damages) of any kind
or nature whether existing or contingent, then known or unknown, asserted or
unasserted, whether in law, equity and administrative proceeding that the
Executive then has or ever had against the Company Indemnitees since the
beginning of the world through the date thereof including, but not limited to,
any and all matters related in any way to the Executive's employment with or
separation from the Company, as well as claims under the Employee Retirement
Income Security Act of 1974, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, any claim
based on state anti-discrimination laws, any claim for wrongful discharge, and
any alleged violation of public policy, contract or tort law, or any other
federal, state, or local law; provided, however, that such release shall not
apply to the terms and conditions of this Agreement, which shall remain valid
and enforceable.
11. Arbitration. In the case of any dispute under this Agreement, the
Executive may initiate binding arbitration in Phoenix, Arizona, before the
American Arbitration Association by serving a notice to arbitrate upon the
Company or, at the Executive's election, institute judicial proceedings, in
either case within 90 days of the effective date of his termination or, if
later, his receipt of notice of termination, or such longer period as may be
reasonably necessary for the Executive to take such action if illness or
incapacity should impair his taking such action within the 90-day period. The
Company shall not have the right to initiate binding arbitration, and agrees
that upon the initiation of binding arbitration by Executive pursuant to this
Section 11 the Company shall cause to be dismissed any judicial proceedings it
has brought against the Executive relating to this Agreement. The Company
authorizes the Executive from time to time to retain counsel of his choice to
represent the Executive in connection with any and all actions, proceedings,
and/or arbitration, whether by or against the Company or any director, officer,
shareholder, or other person affiliated with the Company, which may affect
Executive's rights under this Agreement. The Company agrees (i) to pay the fees
and expenses of such counsel, (ii) to pay the cost of such arbitration and/or
judicial proceeding, and (iii) to pay interest to the Executive on all amounts
owed to the Executive under this Agreement during any period of time that such
amounts are withheld pending arbitration and/or judicial proceedings. Such
interest will be at the base rate as announced from time to time by Healthcare
Business Credit Corporation, or its successor.
12. Binding on Successors. If the Company is at any time before or after a
Change in Control merged or consolidated into or with any other corporation or
other entity (whether or not the Company is the surviving entity), or if
substantially all of the assets thereof are transferred to another corporation
or other entity, the provisions of this Agreement will be binding upon and inure
to the benefit of the corporation or other entity resulting from such merger or
consolidation or the acquirer of such assets, and this Section 12 will apply in
the event of any subsequent merger or consolidation or transfer of assets. In
the event of any such merger, consolidation or sale of assets, references to the
Company in this Agreement shall unless the context suggests otherwise be deemed
to include the entity resulting from such merger or consolidation or the
acquirer of such assets of the Company.
13. Withholding. All payments required to be made by the Company hereunder
to the Executive or his dependents, beneficiaries, or estate will be subject to
the withholding of such amounts relating to tax and/or other payroll deductions
as may be required by law.
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14. No Duty to Mitigate. There shall be no requirement on the part of the
Executive to seek other employment or otherwise mitigate damages in order to be
entitled to the full amount of any payments and benefits to which the Executive
is entitled under this Agreement, and the amount of such payments and benefits
shall not be reduced by any compensation or benefits received by the Executive
from other employment.
15. No Contract of Employment. Nothing contained in this Agreement shall
be construed as a contract of employment between the Company and the Executive,
or as a right of the Executive to continue in the employ of the Company, or as a
limitation of the right of the Company to discharge the Executive with or
without Cause; provided that the Executive shall have the right to receive upon
termination of his employment the payments and benefits provided in this
Agreement.
16. No Other Severance. Payments made by the Company pursuant to this
Agreement shall be in lieu of severance payments, if any, which might otherwise
be available to the Executive.
17. Successors and Assigns. The provisions of this Agreement, shall be
binding upon and shall inure to the benefit of the Executive, his executors,
administrators, legal representatives, and assigns, and the Company and its
successors.
18. No Set-off. The Company shall have no right of set-off or
counterclaims, in respect of any claim, debt, or obligation, against any
payments to the Executive, his dependents, beneficiaries, or estate provided for
in this Agreement.
19. Assignment. No right or interest to or in any payments shall be
assignable by the Executive; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount, or if no
beneficiary has been so designated, the legal representative of the Executive's
estate. No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void, and of no effect.
20. Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 20.
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21. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement,
including without limitation that certain letter agreement between the Company
and the Executive dated May 24, 2001.
22. Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
23. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Arizona.
24. Miscellaneous.
24.1 No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
24.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
24.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
VISTACARE, INC.
By: /s/ Xxxxx X. Xxxxx
Chairman
/s/ Xxxxxxx X. Xxxxxx
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