Exhibit 10.32
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 28, 1999, between RAINTREE HEALTHCARE
CORPORATION, a Delaware corporation (the "Company"), and XXX XXXXXX ("Fields" or
"Executive").
Company wishes to employ Fields and Fields wishes to be employed by
Company, in each case, pursuant to the terms and subject to the conditions
hereof.
Accordingly, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES. Company hereby employs Fields as its Executive
Vice President and Chief Financial Officer, and Fields hereby accepts such
employment. Fields, shall devote all his business time and attention to the
business of Company, subject to the direction and control of the Board.
2. TERM. Unless earlier terminated as hereinafter provided, the term of
this Agreement shall commence on the date hereof (the "Commencement Date") and
continue until the third anniversary of the Commencement Date.
3. COMPENSATION. (a) Base Salary. Company shall pay Executive a salary,
before deducting all applicable withholdings, at the annual rate of $180,000
effective as of February 1, 1999 payable in accordance with Company's standard
executive payroll policies as in effect from time to time. Within ninety (90)
days after the end of each fiscal year, Company shall consider increases in the
annual rate of such salary to be effective as of February 1 of each year
commencing February 1, 2000.
(b) Incentive Bonus. The Board's compensation committee shall design and
present to the Board for review, adjustment and adoption an incentive
compensation program for key employees. Such program may include cash and stock
option incentives and will provide for participation by Executive. The program
shall, as it relates to cash compensation, provide that Executive shall be
entitled to receive a cash bonus in respect of any fiscal year, commencing with
the fiscal year ending December 31, 1999, for which Company achieves EBITDA (as
hereinafter defined) of at least 90% of budgeted EBITDA for such fiscal year, as
set forth in the annual budget to be adopted by the Board for such fiscal year
and designated as the annual budget to be used for purposes hereof; provided,
however, that for purposes of the fiscal year ending December 31, 1999, both
budgeted EBITDA and actual EBITDA shall be determined for the eleven-month
period commencing on February 1, 1999. Such bonus shall be in an amount,
expressed as a percentage of Executive's then annual base salary, equal to:
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If EBITDA before income taxes:
50% greater than 100%of budget
40% greater than or equal to 95% or
less than or equal to 100% of budget
30% greater than or equal to 90% or less than
95% of budget
Any such bonus shall be payable as soon as practicable following the end of the
fiscal year, but in no event earlier than the date that follows by 30 days the
filing of Company's annual report on Form 10-K for such year.
For purposes of this Agreement, the following definitions shall apply:
"EBITDA" shall mean, during each applicable fiscal year, for the Company
and its subsidiaries on a consolidated basis, the Net Income (or loss) for such
period, plus, to the extent reflected in the statement of Net Income for such
period, the sum of (a) the Income Tax of the Company and its subsidiaries, (b)
the Interest Expense of the Company and its subsidiaries, (c) Depreciation
Expense of the Company and its subsidiaries, (d) Amortization of the Company and
its subsidiaries, and (e) any charges resulting from the granting of Restricted
Stock Units as provided in Section 3(c) hereof.
"Depreciation Expense" shall mean, during each applicable fiscal year, for
the Company and its subsidiaries on a consolidated basis, that amount of the
Depreciation Expense that is reflected on the financial statements for such
period in accordance with GAAP consistently applied.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession.
"Income Tax" shall mean, during each applicable fiscal year, for the
Company and its subsidiaries on a consolidated basis, the provision or benefit
for federal, state, local and foreign income taxes of the Company and its
subsidiaries for such period as determined in accordance with GAAP consistently
applied.
"Interest Expense" shall mean, during each applicable fiscal year, as
applied to the Company and its subsidiaries on a consolidated basis, the
interest expense of the Company and its subsidiaries for such period as
determined in accordance with GAAP consistently applied.
"Net Income" shall mean, during each applicable fiscal year, for the
Company and its subsidiaries on a consolidated basis, the net income (or loss)
of the Company and its subsidiaries for such period as determined in accordance
with GAAP consistently applied (except as provided in this definition),
excluding from "Net Income," however, (a) any gain or loss, net of taxes,
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realized upon any sale, transfer or other disposition (including by way of
merger or consolidation) by the Company and its subsidiaries of any property or
other assets of the Company and its subsidiaries outside the ordinary course of
business, (b) any gain or loss, net of taxes, realized upon the termination of
any employment benefit plan, and (c) any extraordinary gain or loss, including
any extraordinary costs not associated with the normal operations of the
business of the Company and its subsidiaries net of taxes, in each case (a)
through (c), as determined in accordance with GAAP consistently applied.
(c) Stock Grant and Options. As a material inducement to Executive's
entering into this Agreement, the Board has granted to the Executive on the
Commencement Date, an award of 90,000 Restricted Stock Units, each such Unit
representing the right to receive, subject to vesting, at the times provided for
herein one share of the Common Stock of the Company (the "Restricted Stock Unit
Award"). In addition, the Company shall pay to the Executive dividend equivalent
amounts with respect to the Restricted Stock Units at the time and in the amount
of any dividend distributions paid with respect to shares of Common Stock. The
number of shares of Common Stock underlying vested Restricted Stock Units shall
be delivered to the Executive upon the earlier of (i) the termination of
Executive's employment for any reason and (ii) the third anniversary of the
Commencement Date (provided that Executive shall be permitted to elect to defer
delivery of all or a portion of such shares by written notice specifying a
deferred delivery date(s) sent to the Company not later than the second
anniversary of the Commencement Date (or such other dates as the Company and
Executive shall determine)). The Restricted Stock Units, which shall be in
addition to and not in lieu of any options that would otherwise be granted to
Executive under any compensation program referred to in Section 3(b), shall vest
as follows:
34,000 shares Commencement Date
28,000 shares February 1, 2000
28,000 shares February 1, 2001
or, if earlier, on the date of any termination without Cause (as hereinafter
defined) or any termination by Executive for Good Reason (as defined in Section
6(b)) and shall otherwise be subject to Company's standard terms of grant.
4A. EXPENSES. Company shall also, upon receipt of customary documentation,
reimburse Executive for his reasonable travel and lodging (outside the
Scottsdale area) and other ordinary and necessary business expenses consistent
with Company's expense reimbursement policies as in effect from time to time.
4B. BENEFITS. Company shall provide Executive and his dependents with
health, medical and life insurance, and make payments for Executive's account to
such retirement plan or plans as it may from time to time adopt, in each case,
in a manner consistent with its treatment from time to time of other senior
executive officers.
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5. VACATION, ETC. Executive shall be entitled to vacation with pay in
accordance with Company's vacation policy as in effect from time to time and to
such paid holidays as Company may approve for its executive personnel. Executive
hereby waives, to the maximum extent permitted by applicable law, his right to
be paid at such time as his employment by Company should terminate for unaccrued
vacation or personal days.
6. TERMINATION. The Board may terminate Executive's employment hereunder
prior to the expiration of the term hereof in the manner provided in either
Section 6(a) or Section 6(b). Executive may terminate his employment hereunder
at any time effective upon Company's receipt of at least 30 days' advance notice
to such effect.
(a) FOR CAUSE. Company may terminate this Agreement for Cause upon notice
to Executive stating the facts constituting such cause, provided that Executive
shall have 30 days following such notice to cure any conduct or act, if curable,
alleged to provide grounds for termination for Cause hereunder. For purposes of
this Agreement, "Cause" shall mean (i) the Executive has been convicted of (or
pleads guilty to) a felony; or (ii) the Executive has engaged in willful
misconduct or gross negligence in the performance of his employment duties to
the Company. If Executive's employment is terminated for Cause, the Company will
have no further liability or obligation to Executive except for amounts earned
or accrued under Company sponsored benefit plans prior to termination.
(b) WITHOUT CAUSE. (i) Company may terminate this Agreement at any time
immediately, without Cause, effective upon Executive's receipt of notice to such
effect. Upon termination under this Section 6(b), Company shall pay to
Executive: (i) forthwith, the base salary due him through the date of
termination, (ii) in a lump sum, an amount equal to 18 months of his then base
salary, and (iii) within 90 days following the end of the fiscal year in which
termination occurs, a bonus in an amount determined in the manner described in
Section 3(b) (except, if termination occurs prior to the end of a fiscal year,
prorated for the period during which Executive was employed hereunder), in each
case, less applicable withholdings. In addition, any and all options, restricted
stock or other similar grants of shares shall immediately vest and shall be
immediately exerciseable.
(ii) The provisions of this Section 6(b) shall also apply, and the Company
shall be deemed to have terminated Executive without Cause hereunder, if
Executive terminates his employment with Company for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean any of the following:
(A) Any reason whatsoever within six (6) months of a Change of
Control;
(B) The Company's failure to elect or reelect, or to appoint or
reappoint, Executive to offices or positions involving duties,
responsibilities, authority and dignity of a scope comparable to those of
Executive's most significant offices or positions held at any time during
the term hereof;
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(C) Material change by the Company in the Executive's function, duties
or responsibilities (including reporting responsibilities) of a scope less
than that associated with Executive's most significant position with the
Company during the term hereof;
(D) Executive's base salary is reduced by the Company, unless such
reduction is pursuant to a salary reduction program which affects all of
the Company's exempt employees by the same percentage, or there is a
material reduction in the benefits that were in effect for the Executive on
the Commencement Date under the Company's benefit plans in effect on such
date;
(E) Relocation of the Company's corporate headquarters or Executive's
principal place of employment to a place located outside of the greater
Phoenix metropolitan area; provided that required travel on the Company's
business shall not be deemed a relocation so long as Executive is not
required to be outside of the greater Phoenix metropolitan area for a
period of time that is greater than the period of time he was required to
be outside of the greater Phoenix metropolitan area for the twelve month
period immediately preceding the Commencement Date;
(F) The failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
(G) Material breach of this Agreement by the Company, which breach is
not cured within twenty (20) days after written notice thereof is delivered
to the Company.
For purposes of this Agreement, the term "Change in Control" of the Company
shall mean, and a "Change in Control" shall be deemed to have occurred if after
the date hereof:
(A) Any "person" (as such term is used in Section 13(d) and 14(d)(2)
of the Exchange Act) shall become the beneficial owner (within the meaning
of Rule 13d-3 promulgated pursuant to the Exchange Act, or any successor
provision thereto), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote at an
election of directors;
(B) Individuals who, as of the Commencement Date, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided (A) that any person becoming a member of the Board of Directors of
the Company subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
a majority of the members then comprising the Incumbent Board (other than
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an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act,
or any successor provision thereto) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board, or (B) that the members of the Board of Directors of the Company who
are nominated in the definitive proxy statement furnished in connection
with the solicitation of proxies on behalf of the Board of Directors of the
Company shall be, for purposes of this Agreement, considered as members of
the Incumbent Board; or
(C) Approval by the stockholders of the Company and consummation of
(1) a reorganization, merger, consolidation, or sale or other disposition
of all or substantially all of the assets of the Company, or (2) a
liquidation or dissolution of the Company.
(c) DISABILITY. If during the term of this Agreement, Executive fails to
perform his duties hereunder because of illness or other incapacity for a period
of three consecutive months, Company shall have the right to terminate this
Agreement without further obligation hereunder except for any bonus amount
payable in accordance with this Section 6(c) and any amounts payable pursuant to
disability plans generally applicable to executive employees. Within 90 days
after the end of the fiscal year in which termination pursuant to this Section
6(c) occurs, Executive shall be entitled to receive a bonus payment as provided
in Section 6(b).
(d) DEATH. If Executive dies during the term of this Agreement, this
Agreement shall terminate immediately, and Executive's legal representative
shall be entitled to receive the base salary due Executive for 60 days following
death as well as any other death benefits generally applicable to executive
employees. In addition, within 90 days after the end of the fiscal year in which
Executive's death should occur, Executive's legal representative shall also be
entitled to receive a bonus payment as provided in Section 6(b).
7. CONFIDENTIAL INFORMATION; NON-SOLICITATION. (a) CONFIDENTIAL
INFORMATION. Executive acknowledges that Executive may receive, or contribute to
the production of, Confidential Information. For purposes of this Agreement,
Executive agrees that "Confidential Information" shall mean information or
material proprietary to Company or designated as confidential information by
Company and not generally known by non-Company personnel, which Executive
develops or to which Executive obtains knowledge or access to through or as a
result of Executive's relationship with Company (including information
conceived, originated, discovered or developed in whole or in part by
Executive). Confidential Information includes, but is not limited to , the
following types of information and other information of a similar nature
(whether or not reduced to writing) related to Company's business: discoveries,
inventions, ideas, concepts, research, development, processes, procedures,
"know-how", formulae, marketing techniques and materials, marketing and
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development plans, business plans, customer names and other information related
to customers, price lists, pricing policies, methods of operation, financial
information, employee compensation, and computer programs and systems. Executive
acknowledges that the Confidential Information derives independent economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use. Information publicly known without breach of
this Agreement that is generally employed by the trade at or after the time
Executive first learns of such information, or generic information or knowledge
which Executive would have learned in the course of his employment or work
elsewhere in the trade, shall not be deemed part of the Confidential
Information. Executive further agrees:
(1) To furnish Company on demand, at any time during or after employment, a
complete list of the names and addresses of all present, former and potential
suppliers, financing or leasing sources, patients, customers and other contacts
gained while an employee of Company in Executive's possession, whether or not in
the possession or within the knowledge of Company.
(2) That all notes, memoranda, documentation and records in any way
incorporating or reflecting any Confidential Information shall belong
exclusively to Company, and Executive agrees to turn over all copies of such
materials in Executive's control to Company upon request or upon termination of
Executive's employment with Company.
(3) That while employed by Company and thereafter Executive will hold in
confidence and not directly or indirectly reveal, report, publish, disclose or
transfer any of the Confidential Information to any person or entity, or utilize
any of the Confidential Information for any purpose, except in the course of
Executive's work for Company.
(4) That any idea in whole or in part conceived of or made by Executive
during the term of his employment, consulting or similar relationship with
Company which relates directly or indirectly to Company's current or planned
lines of business and is made through the use of any of the Confidential
Information of Company or any of Company's equipment, facilities, trade secrets
or time, or which results from any work performed by Executive for Company,
shall belong exclusively to Company and shall be deemed a part of the
Confidential Information for purposes of this Agreement. Executive hereby
assigns and agrees to assign to Company all rights in and to such Confidential
Information whether for purposes of obtaining patent or copyright protection or
otherwise. Executive shall acknowledge and deliver to Company (but at its
expense) such written instruments and do such other acts, including giving
testimony in support of Executive's authorship or inventorship, as the case may
be, necessary in the opinion of Company to obtain patents or copyrights or to
otherwise protect or vest in Company the entire right and title in and to the
Confidential Information.
(b) NON-SOLICITATION. During the term of Executive's employment by Company
and for a period of one year thereafter, Executive agrees that he shall not (for
the purpose of or which results in competition with Company or any of its
affiliates or subsidiaries) either solicit any past or existing customers,
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patients or clients of Company or any of its predecessors, affiliates or
subsidiaries or use any Confidential Information; nor will he solicit for any
competing company the employment of any employees of Company or any of its
affiliates or subsidiaries.
(c) INJUNCTIONS. It is agreed that the restrictions contained in this
Section 7 are reasonable, but it is recognized that damages in the event of the
breach of any of the restrictions will be difficult or impossible to ascertain;
and, therefore, Executive agrees that, in addition to and without limiting any
other right or remedy Company may have, Company shall have the right to an
injunction against Executive issued by a court of competent jurisdiction
enjoining any such breach without showing or proving any actual damage to
Company.
(d) PART OF CONSIDERATION. Executive also agrees, acknowledges, covenants,
represents and warrants that he is fully and completely aware, and further
understands, that the foregoing restrictive covenants are an essential part of
the consideration for Company entering into this Agreement and that Company is
entering into this Agreement in full reliance on these acknowledgments,
covenants, representations and warranties.
(e) TIME AND TERRITORY REDUCTION. If the period of time and/or territory
affected by the provisions of this Section 7 are held to be in any respect an
unreasonable restriction, it is agreed that the court so holding may reduce the
territory to which the restriction pertains or the period of time in which it
operates or may reduce both such territory and such period, to the minimum
extent necessary to render such provision enforceable.
(f) SURVIVAL. The obligations described in this Section 7 shall survive any
termination of this Agreement or any termination of the employment relationship
created hereunder.
8. GOVERNING LAW AND VENUE. Arizona law shall govern the construction and
enforcement of this Agreement, and the parties agree that any litigation
pertaining to this Agreement shall be in courts located in Maricopa County,
Arizona.
9. CONSTRUCTION. The language in all parts of this Agreement shall in all
cases be construed as a whole according to its fair meaning and not strictly for
or against any party. The section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. All terms used in one number or gender shall
be construed to include any other number or gender as the context may require.
The parties agree that each party has reviewed this Agreement and has had the
opportunity to have counsel review the same and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply in the interpretation of this Agreement or any amendment hereto.
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10. NONDELAGABILITY OF EXECUTIVE'S RIGHTS AND COMPANY'S ASSIGNMENT RIGHTS.
The obligations, rights and benefits of Executive hereunder are personal and may
not be delegated, assigned or transferred in any manner whatsoever, nor are such
obligations, rights or benefits subject to involuntary alienation, assignment or
transfer. This Agreement shall be assigned automatically to any entity merging
with or acquiring Company or its business.
11. SEVERABILITY. In the event any term or provision of this Agreement is
declared by a court of competent jurisdiction to be invalid or unenforceable for
any reason, this Agreement shall remain in full force and effect, and either (a)
the invalid or unenforceable provision shall be modified to the minimum extent
necessary to make it valid and enforceable or (b) if such a modification is not
possible, this Agreement shall be interpreted as if such invalid or
unenforceable provision were not a part hereof.
12. ATTORNEYS' FEES. Except as otherwise provided herein, in the event
either party hereto institutes an action or other proceeding to enforce any
rights arising out of this Agreement, the party prevailing in such action or
other proceeding shall be paid all reasonable costs and attorneys' fees by the
non-prevailing party, such fees to be set by the court and not by a jury and to
be included in any judgment entered in such proceeding.
13. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed duly given upon receipt if either personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally-recognized overnight courier service, addressed to the parties as
follows:
If to Company: RainTree Healthcare Corporation
00000 X. 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
If to Executive: Xxx Xxxxxx
RainTree Healthcare Corporation
00000 X. 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
or to such other address as either party may provide to the other in accordance
with this Section.
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14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous understandings or agreements in regard thereto. No
waiver of any rights under this Agreement shall be valid unless in writing and
signed by the party to be charged with such waiver. No waiver of any term or
condition contained in this Agreement shall be deemed or construed as a further
or continuing waiver of such term or condition unless the waiver specifically
provides otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RAINTREE HEALTHCARE CORPORATION: EXECUTIVE:
/s/ Xxx Xxxxxx
------------------------------------
Xxx Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
