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