EMPLOYMENT AGREEMENT
Exhibit 10.5
This
EMPLOYMENT AGREEMENT is made and entered into as of this 1st day of
October, 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 Xxxxxxxxxx (“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)(iv) 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” means (i) acquisition by any “person” or
“group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision) (other than an employee benefit plan
of Holdings or its Affiliates, the Warburg Investors or any of their respective
Affiliates, or any underwriter in connection with an offering of the Company’s
securities), by way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision), directly or indirectly, of 50% or
more of the total voting power of Holdings’ securities outstanding immediately
after such acquisition; (ii) consummation of a reorganization, merger or
consolidation of Holdings with any person other than Holdings or its
Affiliates, the Warburg Investors or any of their respective Affiliates (a
“Business Combination”), in each case, in which the Warburg Investors retain,
directly or indirectly, less than 50% of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Holdings or all or
substantially all of its assets either directly or through one or more
subsidiaries); or (iii) the sale, lease, transfer or other conveyance, in one
or a series of related transactions, of all or substantially all of the assets
of Holdings and its subsidiaries, taken as a whole, to any person or group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, or any successor provision) other than the Warburg Investors or any their
respective Affiliates.
(k) “Chronic Care Solutions” shall mean Chronic Care Solutions,
Inc., a Delaware corporation.
(1) “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.
-2-
(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(d) 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.
(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.
(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.
-3-
(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.
(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 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.
-4-
Section 3. Position, Duties and Responsibilities; Place of Performance.
(a) During the Term of Employment, Employee shall be employed and serve
as the Chief Information Officer of 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
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 $250,000,
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 60% of Base
Salary. 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.
-5-
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.
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
-6-
(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 (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
-7-
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) 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;
(iv) An amount equal to the Severance Multiplier multiplied by
the sum of his then current Base Salary, 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 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);
(v) 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
(vi) 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.
-8-
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.
(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
-9-
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
(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, hi 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
-10-
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.
(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
-11-
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.
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.
-12-
(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 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
-13-
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
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 25 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.
-14-
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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
| CCS ACQUISITION, INC. | ||
| /s/ Xxxxxx X. Xxxxxx | ||
| By: Xxxxxx X. Xxxxxx | ||
| Title: Chief Executive Officer | ||
| CHRONIC CARE SOLUTIONS HOLDING, INC. | ||
| /s/ Xxxxxx X. Xxxxxx | ||
| By: Xxxxxx X. Xxxxxx | ||
| Title: Chief Executive Officer | ||
| EMPLOYEE | ||
| /s/ Xxxxxx Xxxxxxxxxx | ||
-15-
