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EXHIBIT 10(Z)
RESPONSE ONCOLOGY, INC.
EMPLOYMENT AGREEMENT FOR CHIEF FINANCIAL OFFICER
THIS AGREEMENT (the "AGREEMENT") is made as of the 1st day of January
2001 (hereinafter "EFFECTIVE DATE") by and between Response Oncology, Inc.
("ROI"), and Xxxxx X. Xxxxx ("EXECUTIVE").
RECITALS
WHEREAS, ROI desires to employ Executive as the Chief Financial Officer
of ROI; and,
WHEREAS, Executive desires to be employed by ROI pursuant to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
ROI hereby employs Executive and Executive hereby accepts employment from ROI as
Chief Financial Officer, commencing on the Effective Date for the term specified
in Section 6.1 hereof.
2. DUTIES. Executive shall devote his best efforts and his full
business and professional time, energy and skill to the service of ROI and
promotion of its interests in his capacity as Chief Financial Officer. Executive
will carry out duties commensurate with and required by such position, and will
assume senior financial authority and responsibility for ROI, subject to and in
accordance with directions, instructions, and requests from the Chief Executive
Officer and the Board of Directors. Executive agrees not to engage in any other
related business, nor to engage in the practice of his profession to any extent
whatsoever, except pursuant to this Agreement, without the express prior written
consent of ROI.
3. COMPENSATION AND BENEFITS.
3.1 BASE COMPENSATION. ROI shall pay Executive a base salary ("BASE
SALARY") of one hundred eighty-five thousand dollars ($185,000) per year,
subject to applicable withholdings. Base Salary shall be payable according to
the customary payroll practices of ROI but in no event less frequently than once
each month. The Base Salary shall be reviewed annually and shall be subject to
an adjustment according to the policies and practices adopted by the Board of
Directors from time to time.
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3.2 ANNUAL INCENTIVE BONUS. ROI will pay Executive an annual
incentive bonus ("INCENTIVE BONUS"), if any, of up to forty percent (40%) of
Executive's Base Salary at the end of each year. Any such Incentive Bonus will
be payable no later than January 31st of the year subsequent to the year for
which the Incentive Bonus is approved by the Board. The Incentive Bonus will be
based, in the sole and absolute discretion of the Board of Directors, on the
Board's evaluation of Executive's performance and on performance targets
established annually by the Board.
3.3 EXECUTIVE STAY BONUS. ROI will pay Executive an Executive Stay
Bonus of one and one half (1.5) times the sum of the Executive's Base Salary
plus a bonus of 40% of the Base Salary ("Executive Stay Bonus") to be paid
within ten (10) days of the effective date that the Company emerges from
bankruptcy or the Board of Directors declares that a period of restructuring has
concluded. The Board of Directors has declared that the period of reorganization
began as of January 1, 2001. If Executive remains employed with the Company
subsequent to April 30, 2001, during a period of restructuring, equaling no more
than twelve (12) months from January 1, 2001, and is then terminated without
cause or voluntary termination by Executive for Good Reason, as defined in
Section 6.2.4 below, Executive will receive his Executive Stay Bonus in lieu of
the compensation provided in Section 6.2.6. Upon the commencement of a period of
restructuring, ROI shall deposit with an escrow agent, pursuant to an escrow
agreement between ROI and such escrow agent, a sum of money or marketable
securities which is sufficient in the opinion of ROI's management to fund eighty
percent (80%) of the amounts which may become due to Executive under this
Section, which money or marketable securities shall be utilized either to
satisfy ROI's obligation to pay the Executive Stay Bonus or to pay the
compensation and benefits under Section 6.2.3 of this Agreement. The escrow
agreement shall provide that such agreement may not be terminated until the
earlier of (i) Executive's employment has been terminated and all amounts due to
Executive as set forth in this Agreement have been paid to Executive, as
certified in writing by ROI and the Executive, or (ii) the mutual written
consent of the Executive and ROI.
3.4 ADDITIONAL BENEFITS. Executive will be entitled to participate
in all employee benefit plans or programs and receive all benefits and
perquisites to which any salaried employee is eligible under any existing or
future plan or program established by ROI for salaried employees, including,
without limitation, all plans developed for executive officers of ROI, to the
extent permissible under the terms and provisions of such plans or programs.
These plans or programs may include group hospitalization, health, dental care,
life or other insurance, tax qualified pension, car allowance, savings and sick
leave plans. Executive will also be entitled to additional payments for (a)
continuing professional education, (b) professional licensure and (c)
professional dues and subscriptions. The calendar year limitation for the above
items is $5,000.
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Notwithstanding the foregoing, ROI may require attendance at certain conferences
or professional education seminars that shall be outside the scope of the annual
limitation for reimbursement. Nothing in this Agreement will preclude ROI from
amending or terminating any of the plans or programs applicable to salaried
employees or executive officers. Notwithstanding the foregoing, Executive will
be entitled to annual paid vacation, as provided in the ROI Vacation Policy
(which shall be no less than four (4) weeks per year), which amount shall not
accumulate or carry over from year to year. If ROI requests Executive to
relocate from Memphis, Tennessee and Executive does not terminate for Good
Reason pursuant to Section 6.2.4, Executive shall receive the Executive Stay
Bonus within seven (7) days of the acceptance of the relocation.
3.5 BUSINESS EXPENSES. ROI will reimburse Executive for all
reasonable travel and other expenses incurred by Executive in connection with
the performance of his duties and obligations under this Agreement upon
Executive's submitting proper documentation in accordance with ROI's policies
for expense reimbursement.
3.6 WITHHOLDING. ROI may directly or indirectly withhold from any
payments under this Agreement all federal, state, city, or other taxes that
shall be required pursuant to any law or governmental regulation.
3.7 STOCK OPTIONS. Executive shall be granted stock options for one
hundred thousand (100,000) shares of ROI's common stock from the 1996 Stock
Incentive Plan which will vest on the grant date. The grant date and exercise
price for each share subject to the options shall be equal to the closing price
of ROI shares on January 30, 2001 of $0.313 a share. In the event the Board of
Directors makes additional stock options available to management personnel,
Executive will be eligible for such options provided, however, that Executive's
performance is then satisfactory as determined by the Board of Directors or
their designee in their or his sole discretion. Notwithstanding anything to the
contrary in this Agreement, Executive will forfeit the right to exercise and
shall return and deliver to ROI all vested by unexercised stock options if
Executive, whether during his employment or at any time afterward, breaches any
fiduciary duty owed to ROI or engages in any intentional conduct for which
Executive may be immediately terminated pursuant to Section 6.2.2 of this
Agreement.
4. DEATH BENEFIT; DISABILITY COMPENSATION; KEY MAN INSURANCE
4.1 PAYMENT IN EVENT OF DEATH. In the event of the death of
Executive during the term of this Agreement, ROI's obligation to make payments
under this Agreement shall cease as of the date of death, except for earned but
unpaid Base Salary and Incentive Bonus, which will be paid on a pro-rated basis
for that year. Executive's designated beneficiary will be entitled to receive
the proceeds of any life or other insurance or other death benefit programs
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provided or referred to in this Agreement, other than "key man" life insurance
benefits.
4.2 DISABILITY COMPENSATION. Notwithstanding the disability of
Executive, ROI will continue to pay Executive pursuant to Section 3 hereof
during the term of this Agreement, unless the Executive's employment is earlier
terminated in accordance with this Agreement. In the event the disability
continues for a period of three (3) months, ROI may thereafter terminate this
Agreement and the Executive's employment. Following such termination, ROI will
pay Executive amounts equal to his regular installments of Base Salary, as of
the time of termination, for a period of the greater of (a) the remaining term
of this Agreement or (b) twelve (12) months from the date of such termination.
All other compensation will cease except for earned but unpaid Incentive Bonus
which would be payable on a pro-rated basis for the year in which the disability
occurred, through the date of termination. ROI will make reasonable
accommodations to Executive's disability in accordance with applicable laws
where required.
4.3 RESPONSIBILITIES IN THE EVENT OF DISABILITY. During the period
Executive is receiving payments following his disability and as long as he is
physically and mentally able to do so, Executive will furnish information and
assistance to ROI and from time to time will make himself available to ROI to
undertake assignments consistent with his position or prior position with ROI.
If ROI fails to make a payment or provide a benefit required as part of this
Agreement, Executive's obligation to provide information and assistance will
end.
4.4 DEFINITION OF DISABILITY. For purposes of this Agreement, the
term "disability" will mean Executive's inability to perform all the material
and substantial duties as Chief Financial Officer of ROI.
4.5 KEY MAN LIFE INSURANCE. Upon request by ROI, Executive agrees to
cooperate with ROI in obtaining "key man" life insurance on the life of
Executive with death benefits payable to ROI. Such cooperation shall include the
submission by Executive to a medical examination and his response to inquiries
regarding his medical history.
5. CONFIDENTIALITY; CORPORATE OPPORTUNITIES.
5.1 CONFIDENTIAL INFORMATION DEFINED. The term "CONFIDENTIAL
INFORMATION" means any proprietary or non-public knowledge, idea or information,
in any form (whether tangible or intangible, oral, written, electronic or
otherwise), pertaining in any manner to the business or operations of ROI or its
clients or customers, including but not limited to records, files, software,
know-how, technical information, processes, plans, data, activities, research,
development(s), technology, trade secrets, proprietary information, methods,
specifications, notes, summaries, studies, analysis, instructions, designs,
graphs, drawings,
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services, products, inventions, computer files, data, research, patient lists or
records, forms, documents, business plans, budgets, schedules, projections, cost
analyses, markets or marketing information, banking or credit relationships,
payroll and other financial or business information. Confidential Information
does not include any information, knowledge, or idea which (i) is generally
known in ROI's or any relevant trade or industry; (ii) is part of Executive's
general knowledge prior to his employment by ROI; (iii) is disclosed to
Executive by a third party who rightfully possesses the information (without
confidential or proprietary restriction) and did not learn of it, directly or
indirectly, from ROI; or (iv) is required by law to be publicly disclosed or is
publicly disclosed pursuant to judicial or administrative proceedings.
5.2 PROTECTION OF CONFIDENTIAL INFORMATION. During the term of this
Agreement, Executive covenants and agrees that he will hold all Confidential
Information in strictest confidence and will not directly or indirectly
disclose, or permit to be disclosed, any Confidential Information to any person,
firm, corporation, or other business organization or use any Confidential
Information except as required by Executive's responsibilities or in the course
of carrying out Executive's duties pursuant to this Agreement or as required by
law. Additionally, for five (5) years following termination of this Agreement,
Executive covenants and agrees that he will not directly or indirectly disclose,
or permit to be disclosed, any Confidential Information to any person, firm,
corporation, or other business organization or use any Confidential Information
for any purpose except as permitted in writing by ROI.
5.3 OWNERSHIP OF CONFIDENTIAL INFORMATION. Executive recognizes and
agrees that all Confidential Information and all other notes, records, files,
patient lists, forms and other documents and the like relating to ROI's
business, and all computer files, programs and information which Executive
prepares, uses, has, obtains, or otherwise comes into contact with during the
term of this Agreement will be and remain ROI's sole property, and shall not be
removed from ROI's offices except as required in the course of Executive's work,
and shall be returned and delivered to ROI upon termination of this Agreement or
earlier if requested by ROI. After termination of this Agreement or at any other
time requested by ROI, Executive shall not retain any copies, abstracts,
sketches or other physical embodiment of any items which embody, reflect,
contain or evidence Confidential Information. Executive acknowledges that any
use or disclosure of Confidential Information outside the scope of his
employment would cause irreparable and continuing injury to ROI for which no
award of monetary damages would be adequate, and that injunctive relief for ROI
would be appropriate, in addition to any other rights ROI may have, to restrain
and bar any such use or disclosure or threatened use or disclosure. Executive
hereby waives any requirement that ROI submit proof of the economic value of any
trade secret or post a bond or other security.
5.4 CORPORATE OPPORTUNITIES. If Executive becomes aware of any
possible or existing idea, enterprise, transaction, venture or opportunity which
is or may be related in any
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way to the past, present or prospective business of ROI or which may be within
the scope of any reasonable expansion of ROI's business(es) ("CORPORATE
OPPORTUNITY"), Executive covenants and agrees that he shall promptly and fully
present the Corporate Opportunity to ROI. Executive acknowledges and agrees that
ROI shall determine, in its sole discretion, whether to pursue any such
Corporate Opportunity and that Executive shall not pursue for his own benefit or
disclose to any third party any Corporate Opportunity without prior written
consent from ROI. If Executive pursues any Corporate Opportunity without written
approval from ROI, ROI shall have the right to terminate this Agreement pursuant
to Section 6.2.2(b).
5.5 FORMER EMPLOYER INFORMATION. Executive agrees that he will not,
during employment with ROI, improperly use or disclose any proprietary
information or trade secrets of any former employer or other person or entity
and that Executive will not bring onto the premises of ROI any unpublished
document or proprietary information belonging to any such employer, person or
entity unless consented to in writing by such employer, person or entity.
5.6 REMEDIES. Nothing in this Section 5 is intended to limit, nor
shall it limit, any remedy of ROI otherwise available under applicable statutory
or other law.
6. TERM AND TERMINATION.
6.1 TERM. This Agreement shall commence on the Effective Date and
remain in effect for an initial period of two (2) years unless terminated
earlier by either party. Thereafter, this Agreement shall automatically renew
for successive one (1) year terms unless either party provides notice of its
intent not to renew at least ninety (90) calendar days prior to the end of the
initial or any renewal term.
6.2 TERMINATION.
6.2.1 TERMINATION FOR MATERIAL BREACH. Either party may
terminate this Agreement if a material breach by the other party of any term or
condition of this Agreement remains uncured for ten business (10) days after the
breaching party's receipt of written notice of such breach from the
non-breaching party. A material breach by Executive shall include any refusal to
comply with the reasonable directions of the Board of Directors or Chief
Executive Officer or with ROI's policies and procedures. A material breach by
ROI shall include any failure by ROI to pay any obligations under Sections 3 and
4 of this Agreement.
6.2.2 IMMEDIATE TERMINATION FOR CAUSE. ROI shall have the
absolute right at any time, upon written notice to Executive, to terminate
Executive immediately for cause upon the happening of any one or more of the
following events whether or not any such event also constitutes a material
breach of any provision of this Agreement:
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(a) Executive's bad faith or gross negligence in the
performance of his duties hereunder; Executive's repeated neglect or
non-performance of his primary duties hereunder; Executive's intentional
nonperformance of such primary duties; Executive's intentional malfeasance or
willfully poor performance of his duties; any intentional act or omission that
the Executive knew or reasonably should have known would injure the reputation
of ROI; any willful or intentional act, beyond the scope of Executive's duties
hereunder, which materially and negatively affects ROI's financial condition; or
willful misconduct pertaining to any aspect of Executive's employment with ROI;
(b) Executive's breach of trust or of fiduciary duty
(including but not limited to improper disclosure or use of Confidential
Information or a Corporate Opportunity), as reasonably determined by the
President and/or Board of Directors of ROI;
(c) Executive's fraud, misappropriation, embezzlement or
other act of dishonesty (including any misrepresentation made by Executive to
ROI during employment or discovery of one made to ROI prior to employment), or
conviction of or entering a plea of nolo contendere to any felony or any
misdemeanor involving dishonesty, fraud, substance abuse or distribution of
controlled substances.
6.2.3 TERMINATION IN THE EVENT OF CHANGE IN CONTROL.
(a) In consideration of all covenants of Executive
hereunder, including, without limitation, Executive's covenant not to compete
contained in Section 8 herein, if this Agreement is terminated by ROI within
four (4) months prior to or within one (1) year following a Change in Control
(as that phrase is defined below), ROI will pay to Executive within sixty (60)
calendar days of the effective date of termination a lump sum equal to eighteen
(18) months base salary plus a bonus of 40% of the Executive's Base Salary.
Notwithstanding anything to the contrary in this Agreement, the foregoing
termination payment ("Termination Payment") shall be calculated and paid
immediately prior to the closing of the transactions constituting a Change of
Control if the Executive receives notice prior to the Change of Control that his
employment will be terminated on or after the Change of Control.
A "CHANGE IN CONTROL" shall occur if an event or series of events occurs after
the effective date of this Agreement which would constitute either a change in
ownership of ROI, within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, and the regulations promulgated there under ("SECTION
280G"), or a change in the ownership of a substantial portion of ROI's assets,
within the meaning of Section 280G (but for purposes of this definition, the
fair market value threshold for determining "a substantial portion of ROI's
assets" shall be "greater than fifty percent").
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(b) (i) Executive shall be permitted to participate in, and
have all rights and benefits provided by, all benefit plans which
Executive was eligible to participate in immediately prior to the
termination date (to the extent such participation is possible under
the laws then pertaining to such benefit plans), for a minimum of two
and one-half (2.5) years following the termination date.
(ii) All options issued pursuant to the 1996 Stock Incentive
Plan or any other stock option plan adopted by ROI, or any option
granted under the plan of any successor company that replaces or
assumes ROI's options ("OPTIONS") granted to Executive shall become
fully vested and immediately exercisable at the time of a Change in
Control Termination; provided, however, that the acceleration of
exercisability or issuance shall be subject to the imposition of such
restrictions on transferability of the subject shares of common stock
of ROI or any securities of a successor company which shall have
replaced such common stock ("COMPANY SHARES") as may be necessary to
permit Company Shares issued upon exercise of such Options to continue
to qualify for the exception from Section 16(b) of the Securities
Exchange Act of 1934, as amended, provided by Rule 16b-3 thereunder.
The Company represents and warrants that such vesting is not prohibited
by the 1996 Stock Incentive Plan. Any written grant of Options to the
Executive shall contain the foregoing vesting provision. In lieu of
Company Shares issuable upon exercise of any outstanding and
unexercised Options granted to Executive, Executive may, at Executive's
option, receive an amount in cash equal to the product of (i) the
excess of the higher of the Fair Market Value of Company Shares on the
Termination Date, or the highest per share price for Company Shares
actually paid in connection with any Change of Control of the Company,
over the per share exercise price of each Option held by Executive,
times (ii) the number of Company Shares covered by each such Option. In
the event Executive does not elect to receive a cash payment for any
outstanding and unexercised Options granted to Executive, Executive
shall have the right to exercise such Options in accordance with the
terms and conditions provided in the applicable stock option plans.
(iii) The Company shall also pay to Executive all legal fees
and expenses incurred by Executive as a result of a termination
described in SECTION 6.2.3 of this Agreement (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section
4999 of the Code to any payment or benefit provided hereunder).
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(c) CERTAIN TRANSACTIONS. Notwithstanding the definition of
change of control, unless otherwise determined in a specific case by
majority vote of the Board, a Change of Control shall not be deemed to
have occurred for purposes of this Agreement solely because (i) an
entity in which the Company directly or indirectly beneficially owns
50% or more of the voting securities or (ii) any Company-sponsored
employee stock ownership plan, or any other employee benefit plan of
the Company, either files or becomes obligated to file a report or a
proxy statement under or in response to Schedule 13D, Schedule 14D-l,
Form 8-K or Schedule 14A (or any successor schedule, form or report or
item thereon) under the Exchange Act, disclosing beneficial ownership
by it of shares of stock of the Company, or because the Company reports
that a Change of Control of the Company has or may have occurred or
will or may occur in the future by reason of such beneficial ownership.
(d) TAX MATTERS. If any tax on Excess Parachute Payments (as
defined in Section 280G of the Internal Revenue Code of 1986, as
amended) will be imposed on the Executive under Internal Revenue Code
("the Code") section 4999 as a result of the Executive's receipt of the
Termination Payment and any other payment, benefit or compensation
which Executive receives or has the right to receive from ROI or any of
its affiliates solely as a result of his termination related to a
Change of Control ("the Change of Control Benefits"), the Company shall
indemnify the Executive and hold him harmless against all claims,
losses, damages, penalties, expenses, interest, and excise taxes
imposed by the federal government or pursuant to any similar provision
of any applicable state law (collectively "Excise Tax"). To effect this
indemnification, the Company shall pay to the Executive the additional
amount ("Additional Amount") which is sufficient to indemnify and hold
the Executive harmless from the application of Code sections 280G and
4999, including the amount of (i) the Excise Tax that will be imposed
on the Executive under section 4999 of the Code with respect to the
Change of Control Benefits; (ii) the additional (A) Excise Tax under
section 4999 of the Code, (B) hospital insurance tax under section
3111(b) of the Code and (C) federal, state and local income taxes for
which the Executive is or will be liable on account of the payment of
the amount described in subitem (i); and (iii) the further excise,
hospital insurance and income taxes for which the Executive is or will
be liable on account of the payment of the amount described in subitem
(ii) and this subitem (iii) and any other indemnification payment under
this SECTION 6.2.3(d). The Additional Amount shall be calculated and
paid to the Executive at the time that the Termination Payment is paid
to the Executive. In calculating the Additional Amount, the highest
marginal rates of federal and applicable state and local income taxes
applicable to individuals and in effect for the year in which the
Change of Control occurs shall be used. Nothing in this paragraph shall
give the Executive the right to receive indemnification from the
Company for federal, state or
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local income taxes or hospital insurance taxes payable solely as a
result of the Executive's receipt of (a) the Change in Control
Benefits, or (b) any additional payment, benefit or compensation other
than the Additional Amount. As specified in items (ii) and (iii),
above, all income, hospital insurance and additional Excise Taxes
resulting from additional compensation in the form of the Excise Tax
payment specified in item (i), above, shall be paid to the Executive.
The provisions of this SECTION 6.2.3(d) are illustrated by the
following example:
Assume that the Termination Payment and all other Change of
Control Benefits result in a total federal, state and local income tax
and hospital insurance tax liability of $180,000; and an Excise Tax
liability under Code section 4999 of $70,000. Under such circumstances,
the Executive is solely responsible for the $180,000 income and
hospital insurance tax liability; and the Company must pay to the
Executive $70,000, plus an amount necessary to indemnify the Executive
for all federal, state and local income taxes, hospital insurance
taxes, and Excise Taxes that will result from the $70,000 payment to
the Executive and from all further indemnification to the Executive of
taxes attributable to the initial $70,000 payment.
6.2.4 TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive shall
have the absolute right at any time, upon written notice to ROI, to terminate
this Agreement without loss of any rights hereunder of the termination is for
Good Reason as defined below. "Good Reason" shall be defined for the purposes of
this Agreement to mean: (i) a change in the Executive's status, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment and without Executive's consent, represents a
reduction in or demotion of the Executive's status, position or responsibilities
as in effect immediately prior to such change; the assignment to the Executive
of any duties or responsibilities which, in the Executive's reasonable judgment,
are inconsistent with such status, position or responsibilities; or any removal
of the Executive from or failure to reappoint or reelect the Executive to any
such positions, except in connection with a termination with cause, as a result
of Executive's death or permanent disability or by voluntarily termination; (ii)
a reduction in Executive's Base Salary as in effect on the date hereof or as
same may be increased from time to time or modifying, suspending, discontinuing
or terminating any award plan or benefit plan in a manner which treats Executive
differently than other similar situated employees or singled out or
discriminates against Executive; (iii) the relocation of ROI's principal
executive office to a location outside a thirty miles radius of Memphis,
Tennessee or ROI's requiring Executive to be based any place other than a
location within a thirty mile radius of Memphis, Tennessee without the
Executive's consent, except for reasonably required travel on the company's
business; (iv) failure by ROI to continue to provide the Executive with
compensation and benefits provided for under this
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Agreement or benefits substantially similar to those provided to the Executive
under any of the employee benefit plans in which the Executive is or becomes
participant; or the taking of any action by ROI which would directly or
indirectly materially reduce any such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the Change of
Control; (v) a material breach of ROI of any provision of this Agreement; (vi)
any purported termination of the Executive's employment by ROI which is not
effected pursuant to the procedure set forth in Section 6; or (vii) ROI's
failure to obtain an agreement reasonable satisfactory to the Executive from any
successor or assign of the company to assume and agree to perform this
Agreement.
6.2.5 TERMINATION WITHOUT CAUSE. Both ROI and Executive may
terminate this Agreement without cause and in the absence of material breach on
thirty (30) days written notice to the other party.
6.2.6 SEVERANCE BENEFIT. In the event that ROI terminates
Executive without cause or Executive terminates for Good Reason, other than in
the case of a Change of Control, then ROI shall pay Executive a lump sum
severance amount equal to twelve (12) months Base Salary plus a bonus of 40% of
the Executive's Base Salary, except as provided in Section 3.3.
6.2.7 TERMINATION FOR MATERIAL BREACH OR WITH CAUSE; VOLUNTARY
TERMINATION. If the Executive is terminated for material breach or with cause
pursuant to Sections 6.2.1 or 6.2.2, or Executive terminates this Agreement in
the absence of a material breach by ROI (regardless of whether there has been a
Change in Control), ROI will not be obligated to pay Executive any compensation
or Incentive Bonus following the effective date of termination but will pay
Executive earned but unpaid Base Salary through the effective date of
termination. In the event of non-renewal, ROI will pay Executive all
compensation earned and any Incentive Bonus determined through the end of the
contract term. Any amounts due to Executive hereunder will be paid within thirty
calendar (30) days of the effective date of termination, unless otherwise
required by law. The exercisability of stock options granted to Executive shall
be governed by any applicable stock option agreements and the terms of the
respective stock option plans.
7. DISPUTE RESOLUTION.
7.1 ARBITRATION PROCEDURE. Any controversy, claim, or dispute
arising out of or relating to this Agreement (including but not limited to the
interpretation, construction, or enforcement of any of the terms of this
Agreement or the breach of any provision of it) shall be settled by arbitration
administered by the American Arbitration Association ("AAA") under its
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Commercial Dispute Resolution Procedures, modified to the extent, if any, that
the arbitration rules are inconsistent with the terms of this Section 7. All
such arbitration proceedings shall take place in and be conducted in Memphis,
Tennessee, and shall be conducted by one arbitrator selected in accordance with
the arbitration rules. The arbitrator shall issue a written opinion setting
forth the arbitrator's findings of fact and conclusions of law. The arbitrator
shall have no authority to award punitive or other damages beyond the prevailing
parties' actual damages and shall not, in any event, make any ruling, finding,
or award that does not conform to the terms and conditions of this Agreement.
The parties agree that the decision of the arbitrator shall be final, binding,
and conclusive. The parties agree that the arbitration award may be enforced in
any court having jurisdiction thereof by the filing of a petition to enforce
said award. All expenses (e.g. the filing fees and arbitrators' fees) of the
arbitration shall be shared equally by the parties. Each party, however, shall
bear the expense of its own counsel, experts, witnesses, and preparation and
presentation of proof.
7.2 EQUITABLE REMEDIES AVAILABLE. Notwithstanding any provision in
Section 7.1 and in addition to the rights and procedures available to the
parties pursuant to Section 7.1, either party may at any time seek injunctive
relief, whether temporary, preliminary, or permanent, and/or an order or
judgment for specific performance from any state or federal court properly
having jurisdiction over the matters then in dispute and located in Memphis,
Tennessee. Executive and ROI each consent to personal jurisdiction and venue of
a court of competent jurisdiction sitting in Memphis, Tennessee for purposes of
any action or proceeding contemplated by this Section 7. The parties agree that
a final order or judgment in any such action or proceeding shall, to the extent
permitted by applicable law, be conclusive and may be enforced in other
jurisdictions by suit on the order or judgment or in any other manner provided
by applicable law related to the enforcement of judgments.
8. COVENANT NOT TO COMPETE OR SOLICIT.
8.1 DURING THE TERM OF EMPLOYMENT. As an inducement to ROI to enter
into this Agreement and in consideration of the amounts payable to Executive
hereunder, Executive covenants and agrees not to Compete with ROI (as defined in
Section 8.3) at any time while he is employed by ROI or receiving any payments
from ROI.
8.2 VOLUNTARY TERMINATION; TERMINATION WITH OR WITHOUT CAUSE As a
further inducement to ROI to enter into this Agreement and in consideration of
the amounts payable to Executive hereunder, Executive covenants and agrees that,
in the event of a voluntary termination of this Agreement without Good Reason by
Executive subject to the exception below, or in the event of termination by ROI
with cause or for material breach (all regardless of a Change in Control), he
will not Compete with ROI for a period of one (1) year from the date of such
termination; provided, however, that if a voluntary termination without Good
Reason by
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Executive follows a notice by ROI under Section 6.1 that the term of this
Agreement will not be automatically extended, or if ROI terminates this
Agreement without cause and in the absence of a material breach by Executive,
there will be no restriction on Executive's right to Compete with ROI after the
effective date of termination. The one-year period of non-competition set forth
in this Section 8.2 shall be extended by the duration of any violation by
Executive of this covenant. Executive also covenants that he will not at any
time during or after his employment by ROI disparage ROI or any of its
shareholders, directors, officers, employees or agents.
8.3 DEFINITION OF "COMPETE WITH ROI". For the purposes of this
Section 8, the term "Compete with ROI" means any action(s) by Executive, direct
or indirect, for his own account or for the account of any other person or
entity, either as an officer, director, stockholder, owner, partner, member,
promoter, employee, consultant, advisor, agent, manager, creditor or in any
other capacity, resulting in Executive having any pecuniary interest, legal or
equitable ownership, or other financial or non-financial interest in (including
but not limited to lending of Executive's name), or employment, association or
affiliation with, any corporation, business trust, partnership, limited
liability company, proprietorship or other business or professional enterprise
(including self-employment) that (a) provides outpatient cancer services or
services otherwise competitive with or to any of those provided by ROI or any
affiliate or planned on Executive's date of termination to be provided by ROI or
any affiliate (including but not limited to oncology-related services or
management services to any oncology or hematology practice) within a twenty-five
(25) mile radius of any location where ROI or any subsidiary or affiliate of ROI
performs oncology-related, management or other services at the effective date of
a termination of Executive's employment and which location generated either net
revenue or pre-tax profit equal to or greater than ten (10) percent of the net
revenues or ten (10) percent of the total ROI EBITDA in the year prior to
termination, (b) solicits from any supplier or customer of ROI or diverts or
attempts to divert from ROI (or any affiliate) any business of any kind in which
ROI or its affiliate is engaged or is similar to that in which ROI or its
affiliate is engaged or plans on the date of Executive's termination to be
engaged (including but not limited to the solicitation of or interference with
any of ROI's suppliers or customers), or (c) employs or solicits for employment
or work as an independent contractor or otherwise any person employed by ROI
during that person's employment by ROI and for one year thereafter; provided,
however, that the term "Compete with ROI" shall not include ownership (without
any more extensive relationship) of less than a five percent (5%) interest in
any publicly-held corporation or other business entity. Executive acknowledges
that U.S. Oncology and Salick Health Care, Inc. are among the entities which
provide "outpatient cancer services" and/or services otherwise competitive with
or to any of those provided by ROI as of the date of execution of this
Agreement.
8.4 REASONABLENESS OF SCOPE AND DURATION; REMEDIES. Executive
acknowledges that the covenants contained herein are fair and reasonable as to
geographic, professional and temporal scope and are reasonably required to
protect the interests of ROI.
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Executive acknowledges that his breach or threatened or attempted breach of any
provision of Section 8 would cause irreparable harm to ROI not compensable in
monetary damages and that ROI shall be entitled, in addition to all other
applicable remedies, to a temporary and permanent injunction and a decree for
specific performance of the terms of Section 8 without being required to prove
damages or furnish any bond or other security.
8.5 SEVERABILITY. The covenants in this Section 8 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any covenant in this Section 8 is held to
be unreasonable, arbitrary or against public policy, such covenant will be
considered to be divisible with respect to geographic, professional and temporal
scope, and such lesser geographic, professional or temporal scope, or all of
them, as a court or arbitrator of competent jurisdiction or authority may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against Executive.
8.6 NOTICE OF OTHER EMPLOYMENT. Executive will, while any covenant
under this Section 8 is in effect, give written notice to ROI within ten
calendar (10) days after accepting any other employment of the identity of that
employer. ROI may notify such employer that Executive is bound by this Agreement
and furnish such employer with a copy of this Agreement or relevant portions of
it.
9. INDEMNIFICATION OF EXECUTIVE. ROI shall maintain directors' and
officers' liability insurance and shall maintain any other insurance policies
necessary to indemnify Executive, if Executive was or is a party to any third
party proceeding, by reason of the fact that Executive was or is an authorized
representative of ROI, against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Executive in connection with such
third party proceeding so long as Executive acted in good faith and in a manner
he reasonably believed to be in the best interest of ROI and, with respect to
criminal third party proceedings, had no reasonable cause to believe such
conduct was unlawful. ROI shall notify Executive in writing of any changes to
the directors and officers liability insurance coverage. To the extent that
Executive has been successful on the merits or otherwise in defense of any third
party or corporate proceeding or in defense of any claim, issue or matter
therein, Executive shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith.
10. MISCELLANEOUS.
10.1 ASSIGNMENT. Executive agrees that he will not assign, sell,
transfer, delegate or otherwise dispose of or transfer, whether voluntarily or
involuntarily, any rights or obligations under this Agreement. Any purported
assignment, transfer or delegation shall be null
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and void. Nothing in this Agreement shall prevent: the consolidation of ROI
with, or its merger into, any other corporation; the sale or exchange by ROI of
all or any of its stock to or with a third party; the sale by ROI of all or
substantially all of its properties or assets; or the assignment by ROI of this
Agreement and the performance of its obligations hereunder to any successor in
interest, parent, subsidiary or affiliate.
10.2 BINDING AGREEMENT. Subject to Section 10.1, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective heirs, legal representatives, successors and permitted assigns.
10.3 AMENDMENT. No change or modification of this Agreement shall be
valid or binding upon the parties unless and until the same is in writing and
signed by both parties.
10.4 NOTICE. Any notice to be provided pursuant to this Agreement
shall be in writing and shall be provided by hand delivery or certified mail,
return receipt requested to the addresses listed below or to such other address
as may have been furnished to the other party in writing:
Notices to ROI:
Response Oncology, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Chair of Compensation Committee
Notices to Employee:
Xxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Any notice provided pursuant to this Agreement shall be effective as of
the earlier of the date received or within three (3) business days after mailing
by certified mail, return receipt requested. Either party, by written notice to
the other party, may change the address, persons, or entities to which notice is
to be provided.
10.5 HEADINGS. The headings, captions, and titles appearing in this
Agreement are inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or intent of the Agreement or any
paragraph or provision therein.
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10.6 WAIVER OF BREACH. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach of this Agreement. Further,
neither party shall be deemed to have waived any provision of or right under
this Agreement unless such waiver is set forth in writing signed by the party
against whom waiver is asserted. No failure to exercise and no delay in
exercising any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy or power provided herein or by law or in equity.
10.7 SEVERABILITY. If any one or more of the provisions of this
Agreement is ruled to be wholly or partly invalid or unenforceable by a court or
other government body of competent jurisdiction then: (a) the validity and
enforceability of all provisions of this Agreement not ruled to be invalid or
unenforceable shall be unaffected; (b) the effect of the ruling shall be limited
to the jurisdiction of the court or other government body making the ruling; (c)
the provision(s) held wholly or partly invalid or unenforceable shall be deemed
amended, and the Court or other government body is authorized to amend and to
reform the provision(s) to the minimum extent necessary to render it valid and
enforceable in conformity with the parties' intent as manifested in this
Agreement and a provision having a similar economic effect shall be substituted;
and (d) if the ruling and/or the controlling principle of law or equity leading
to the ruling is subsequently overruled, modified, or amended by legislative,
judicial, or administrative action, then the provision(s) in question as
originally set forth in this Agreement shall be deemed valid and enforceable to
the maximum extent permitted by the new controlling principal of law or equity.
10.8 APPLICABLE LAW. The construction, interpretation, and enforcement
of this Agreement shall at all times and in all respects be governed by the laws
of the State of Tennessee, without reference to Tennessee's choice of law or
conflict of law provisions or principles.
10.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof, and supersedes any prior written or oral agreement pertaining to the
subject matter hereof. No change or modification of this Agreement shall be
valid or binding upon the parties unless and until the same is in writing and
signed by the party against whom enforcement of such change or modification is
sought.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 COVENANTS AND UNDERTAKINGS OF SECTIONS 5 AND 8; INJUNCTIVE RELIEF
FOR
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BREACH OR THREATENED BREACH. The covenants and undertakings of Executive in
Sections 5 and 8 are essential elements of this Agreement, and without
Executive's agreement to comply with such covenants, ROI would not have employed
him and entered into this Agreement. ROI and Executive have independently
consulted their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific
regard to the nature of the business conducted by ROI. Executive's covenants and
agreements in Sections 5 and 8 are independent covenants and the existence of
any claim against ROI by Executive under this Agreement or otherwise will not
excuse Executive's breach of any covenant or agreement in Section 5 or 8. The
parties agree that in the event of any breach or threatened breach of any of the
covenants or undertakings of Sections 5 or 8, the damage or imminent damage to
the value and goodwill of ROI's business will be irreparable and extremely
difficult to estimate, making any remedy at law or in monetary damages
inadequate. Accordingly, the parties agree that ROI shall be entitled to
injunctive relief against Executive in the event of any breach or threatened
breach of any such provisions by Executive, in addition to any other relief
(including damages) available to ROI under this Agreement or under applicable
law.
10.12 EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents
and warrants that the execution and delivery of this Agreement by Executive do
not, and the performance by Executive of his obligations hereunder will not,
with or without the giving of notice or the passage of time, or both: (a)
violate any judgment, writ, injunction or order of any court, arbitrator or
governmental agency applicable to Executive; or (b) conflict with, result in the
breach of any provision of or the termination of, or constitute a default under,
any agreement to which Executive is a party or by which Executive is or may be
bound.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the Effective Date.
RESPONSE ONCOLOGY, INC. EXECUTIVE
Signature: Signature:
---------------------- ---------------------------------
Name: Xxxxxxx Xx Xxxxxxx Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
Date: Date:
---------------------- ---------------------------------
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment effective as of July 30, 2001, to Employment Agreement by and
between Response Oncology, Inc., a Tennessee corporation ("ROI") and Xxxxx X.
Xxxxx (the "Executive"), originally effective as of January 1, 2001 (the
"Agreement"),
WHEREAS, ROI desires to continue to employ the Executive to serve as
the Chief Financial Officer of ROI;
WHEREAS, ROI and the Executive each deem it necessary and desirable to
modify the Agreement to reflect the conditions that led ROI to adopt the
Response Oncology, Inc. Employee Retention Plan and the Response Oncology, Inc.
Key Employee Severance Plan, neither of which plan provides for participation by
Executive;
NOW, THEREFORE, in consideration of the premises and mutual obligations
hereinafter set forth, the parties agree to amend the Agreement as follows:
1. Section 3.3 of the Agreement shall be amended to read as follows:
3.3 STAY BONUS. Executive shall become entitled to receive
a bonus (the "Stay Bonus") in the amount of $148,000 upon the first
to occur of: (a) the effective date of ROI's emergence from
bankruptcy (e.g., confirmation of a plan, conversion to Chapter 7),
(b) Executive's termination of employment without cause, as defined
in Section 6.2.2 (" Cause"), or his resignation for Good Reason,
provided, however, Executive is employed under the Agreement on such
date (the "Entitlement Date"). The entire amount of such bonus shall
be paid to Executive no later than ten (10) days following the
Entitlement Date. ROI shall deposit with an escrow agent, pursuant
to an escrow agreement between ROI, Executive, and such escrow
agent, a sum of money or marketable securities which is sufficient
in the opinion of ROI's management to fund one hundred percent
(100%) of the amounts which may become due to Executive under this
Section, which money or marketable securities shall be utilized to
satisfy ROI's obligation to pay the Stay Bonus. The escrow agreement
shall provide that such agreement may not be terminated until the
earlier of (i) Executive's employment has been terminated and all
amounts due to Executive as set forth in this Subsection have been
paid to Executive, as certified in writing by ROI and the Executive,
or (ii) the mutual written consent of the Executive and ROI.
2. Article 3 shall be amended to add new Section 3.8 at the end thereof
to read as follows:
3.8 RESTRUCTURING BONUS. Together with Xxxxxxx XxXxxxxxx,
Executive has assumed primary responsibility for
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obtaining the payment in its entirety of the Company's
current bank debt of $29,198,715 (the "Debt"). If the Debt is so
repaid, or if it is assumed, or if only ministerial steps remain to
complete such repayment or assumption during the twelve (12) month
period beginning on the date this amended Agreement is approved by
the bankruptcy court (the "Performance Measurement Period"),
Executive shall be entitled to receive a payment ("Unenhanced
Restructuring Bonus") equal to $50,000, provided Executive is
employed under the Agreement at that time.
Executive shall receive the following additional payments
(individually and collectively referred to as the "Unsecured
Creditor Bonus" and, together with the Unenhanced Restructuring
Bonus, the "Restructuring Bonus") if amounts specified in the tiers
below are made available for unsecured creditors at any time after
this amended Agreement is approved by the Bankruptcy Court, provided
the amounts are made available as a result of Executive's efforts,
such as, by way of example and not limitation, as a result of a
reorganization plan that was confirmed by the Bankruptcy Court at a
time the Executive was employed by the Company: (i) $60,000 if a
total of $5 million above the Debt is available for unsecured
creditors; (ii) another $26,000 (in addition to the first $60,000)
if a total of $7 million above the Debt is available for unsecured
creditors; (iii) another $28,000 (in addition to the $60,000 and the
$26,000) if a total of $9 million above the Debt is available for
unsecured creditors; and (iv) in addition to the $60,000, $26,000
and $28,000 bonus amounts, up to another $128,000 more by
calculating one and six-tenths percent (1.6%) of every dollar
recovered in excess of $9 million up to $17 million total available
to unsecured creditors.
The Unenhanced Restructuring Bonus shall be increased by an
additional $73,000 if the Debt is eliminated or assumed within the
first three (3) months of the Performance Measurement Period or by
$36,500 if the Debt is eliminated or assumed thereafter, but within
the first six (6) months of the Performance Measurement Period, both
additions (individually a "Time Enhancement") to be conditioned upon
availability of funds to unsecured creditors as follows: Executive
will receive (i) 20 percent of the relevant Time Enhancement if $5
million total recovery is available to unsecured creditors; (ii) 30
percent of the relevant Time Enhancement if $7 million total
recovery is available to unsecured creditors; (iii) 40 percent of
the relevant Time Enhancement if $9 million total recovery is
available to unsecured creditors, and (iv) 100 percent of the
relevant Time Enhancement if more than $9 million total recovery is
available to unsecured creditors.
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The $50,000 payment guaranteed upon satisfaction of the
Debt shall be deposited into escrow upon entry of the order
approving the Employee Retention Plan, and shall be paid to
Executive within ten (10) days of the date the Debt is eliminated or
assumed subject to the conditions set forth in the final two
sentences of this Subsection. The balance of the Restructuring
Bonus, if applicable, shall be paid to Executive within ten (10)
days after achievement of the targets for sums available to
unsecured creditors, also subject to the conditions set forth in the
following two sentences of this Subsection, provided, however, that
no Unsecured Creditor Bonus shall be paid until an Order is entered
by the Court, on notice to all parties, which includes a finding
that a sufficient amount of money with respect to a specific target
is available for payment to unsecured creditors or, if earlier,
actual payment is made to the unsecured creditors. Any Restructuring
Bonus shall be paid only if and to the extent sufficient funds
remain after the Debt is eliminated or assumed. If the remaining
funds are insufficient to pay a full Restructuring Bonus to both
Executive and to Xxxxxxx XxXxxxxxx, the two shall share the
available funds on a pro rata basis.
3. Section 6.2 shall be amended by adding new Section 6.2.8 at the end
thereof to read as follows:
6.2.8 SEVERANCE UPON COURT APPROVAL. Upon approval by the
Bankruptcy Court of this Amendment, Executive shall not be entitled
to the cash severance payments and health and welfare benefits
provided under Section 6.2.3 or 6.2.6, but Executive shall instead
be eligible to receive the payments and benefits described in this
Section in the event his employment is terminated without Cause,
provided, however, that such benefits may be subject to mitigation
as set forth below in paragraph a.
(a) NO CHANGE OF CONTROL. If Executive's employment
is terminated without Cause prior to a Change of Control and within
the first four (4) months of the Performance Measurement Period, he
shall be entitled to receive within ten (10) days thereafter a
lump-sum payment of $185,000, plus any unpaid Stay Bonus. In
addition, ROI shall continue Executive's health and welfare benefits
for a period of twelve (12) months or, if a lesser period, until
Executive obtains comparable benefits from another employer. If
Executive is so terminated during the final eight (8) months of the
Performance Measurement Period or any period thereafter, the amount
of the lump sum payment described above shall instead equal 1.5
times the sum of his then Base Salary (or $277,500, if greater) plus
any unpaid Stay Bonus, and the Company shall continue Executive's
health and welfare benefits
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for a period of eighteen (18) months or, if a lesser period, until
the Executive obtains comparable benefits from another employer.
(b) CHANGE OF CONTROL. Upon approval by the Bankruptcy
Court of this Amendment, if the Executive's termination occurs after
a Change in Control, or in contemplation of Change in Control, then
in lieu of the benefits described in subsection (a) above, Executive
shall be entitled to receive a lump sum payment equal to the lesser
of (a) his Stay Bonus, plus an amount of money equal to 1.5 times
the sum of (i) his Base Salary plus (ii) his annual Target Bonus,
which is forty percent (40%) of his Base Salary, or (b) the Stay
Bonus, Restructuring Bonus (including any Time Enhancement) plus the
cash severance payments described in Subsection (a) above. Executive
shall be entitled to a Restructuring Bonus in the event of a Change
of Control only as provided in this subparagraph (b) and only if he
is not terminated for Cause. In addition, ROI shall continue the
Executive's health and welfare benefits for a period of eighteen
(18) months or, if a lesser period, until the date the Executive
receives comparable coverage from another employer.
4. If ROI remains under the protection of the Bankruptcy Court on or
about May 31, 2002, the Executive's award opportunity under the Corporate Annual
Incentive Plan will be reviewed and implemented, as appropriate.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Agreement effective as of July 16, 2001.
RESPONSE ONCOLOGY, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXECUTIVE
-------------------------------------------
XXXXX X. XXXXX
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