AGREEMENT (the "Agreement"), executed on July __, 1997, effective as of
the closing date of the merger between RoTech Medical Corporation, a Florida
corporation, (the "Company") and Integrated Health Services, Inc. ("IHS") (the
"Effective Date") among Xxxxxxx X. Xxxxxxx ("Xxxxxxx"), the Company and IHS.
WHEREAS, the Company simultaneously with the execution of this
Agreement has entered into a merger agreement with IHS whereby the Company will
become a wholly owned subsidiary of IHS (the "Merger Agreement");
WHEREAS, Xxxxxxx is Chairman of the Board of Directors of the Company
(the "Board"), a member of the Board, Chief Executive Officer, an employee and a
stockholder of the Company;
WHEREAS, Xxxxxxx, the Company and IHS mutually desire to terminate
Xxxxxxx'x employment with the Company on the Effective Date and to enter into
certain other arrangements between Xxxxxxx and the Company, and Xxxxxxx, the
Company and IHS mutually desire to take certain other actions contemplated
herein, upon the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual agreements of the
parties hereto contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and in reliance upon
the representations of the other parties hereto contained herein, each of the
parties hereto agrees as follows:
1. RESIGNATIONS OF XXXXXXX. Effective immediately after the effective
time of the merger contemplated by the Merger Agreement ("Effective Time")
Xxxxxxx shall resign all appointments he holds as a director, officer, employee
or agent of the Company. On the Effective Date, Xxxxxxx shall execute and
deliver to the Company a letter of resignation from all appointments he holds
with the Company substantially in the form of Exhibit A hereto. From and after
the Effective Date, Xxxxxxx shall not be and not hold himself out as a director,
officer, employee, agent or consultant of the Company (except as permitted by
paragraph 2 hereto) and shall relinquish, except as otherwise provided herein
all rights to any additional payments from the Company under any plan, program
or policy maintained by the Company (other than any accrued entitlements under
the provisions of the Company's 401(k) plan and group medical plan) for the
benefit of Company employees.
2. CONSULTING ARRANGEMENT. (a) From the Effective Date, until the third
anniversary thereof (the "Consulting Term"), the Company shall engage Xxxxxxx to
serve as a consultant to the Company, and Xxxxxxx hereby accepts such
engagement.
(b) During the Consulting Term, Xxxxxxx shall furnish such consulting
and advisory services to the Company as the Company may reasonably request (and
only such consulting and advisory services as the Company shall so request) and
shall report directly to the Board, (unless the Board shall decide otherwise) or
a designee of the Board. During the Consulting Term Xxxxxxx'x services shall be
available to the Company as follows:
First through twelfth month 3 days/week
Thirteenth through twenty-fourth 2 days/week
Twenty-fifth through thirty-sixth 1 day/week
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(c) As compensation for the consulting services rendered hereunder, the
Company shall pay to Xxxxxxx a consulting fee in a single sum payable upon
execution of this Agreement in the amount of $1,000,000. In addition, the
Company shall reimburse Xxxxxxx for all reasonable and necessary out-of-pocket
expenses incurred by him in connection with the consulting and advisory services
he performs at the request of the Company pursuant to the Agreement upon
presentation of proper vouchers evidencing such expenses and the purposes for
which they were incurred.
(d) In performing his duties as a consultant, Xxxxxxx shall be, and
only hold himself out as, an independent contractor. The Company shall not treat
Xxxxxxx as an employee of the Company or withhold any federal, state or local
taxes of any nature on behalf of Xxxxxxx from the compensation to be paid
hereunder. Nothing contained herein shall make Xxxxxxx the agent, employee,
joint venturer or partner of the Company or provide Xxxxxxx with the power or
authority to bind the Company to any contract, agreement or arrangement with any
person or entity.
3. NONCOMPETITION.
(a) Disclosure. Xxxxxxx has disclosed to the Board and IHS, in writing,
all healthcare-related interests, investments, or business activities, whether
as proprietor, stockholder, partner, co-venturer, director, officer, employee,
independent contractor, agent, consultant, or in any other capacity or manner
whatsoever, including but not limited to Thayers Pharmacy, Inc., Nephron Corp.
or Select Health of South Carolina, Inc.
(b) Prohibited Activity Without the written consent of a majority of
the Board of the Company, Xxxxxxx may not for a period of fifteen years from the
date hereof, engage in
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any of the following actions following the termination of his employment with
the Company: (i) own, participate or serve, either directly or indirectly,
whether as a proprietor, stockholder, partner, co-venturer, director, officer,
employee, independent contractor, agent, consultant, or in any other capacity or
manner whatsoever in any business or service activity that engages in the
"Primary Business" in which IHS, the Company or any of their respective
subsidiaries or affiliates is engaged, within a radius of 100 miles from any
site, facility, or location which is owned, managed or operated by or affiliated
with IHS or the Company or any of their respective subsidiaries and affiliates
currently or within 60 months of the Effective Date. For purposes of this
Agreement, "Primary Business" shall mean the business of providing home
respiratory therapy, home infusion therapy, and other medical services and
equipment to patients referred by physicians or other services related to home
respiratory therapy and home infusion therapy.
(ii) directly or indirectly, solicit or recruit any individual employed
by the Company, its subsidiaries or affiliates for the purpose of being employed
directly or indirectly by him or by any competitor of the Company on whose
behalf he is acting as an agent, representative or employee, or convey any
confidential information or trade secrets regarding other employees of the
Company, its subsidiaries or affiliates to any other person; or
(iii) directly or indirectly, influence or attempt to influence
customers of the Company or any of its subsidiaries or affiliates to direct
their business to any competitor of the Company; provided, however, that neither
(i) the "beneficial ownership" by Xxxxxxx, either individually or as a member of
a "group," as such terms are used in Rule 13d under
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the Exchange Act, as a passive investment, of not more than five percent (5%) of
the voting stock of any publicly held corporation, nor (ii) the beneficial
ownership by Xxxxxxx of any interest described in the first sentence of Section
3(a) and properly and timely disclosed in accordance with the terms therewith so
long as the entity in which he holds such beneficial interest is not
participating in the Primary Business, shall alone constitute a violation of
this Agreement.
(c) Post Employment Services. Notwithstanding anything contained in
Section 3(a) and (b) above to the contrary, following the fifth anniversary of
the Effective Date and for the remainder of the term of this Section 3, Xxxxxxx
may provide consulting services to any business whether or not it competes with
the Primary Business.
(d) Noncompete Compensation. As compensation for entering into the
noncompete provided hereunder, the Company shall pay to Xxxxxxx a fee in a
single sum payable upon execution of this Agreement in the amount of $4,000,000.
(c) Injunctive Relief. It is expressly agreed that the Company will or
would suffer irreparable injury if Xxxxxxx were to compete with the Company or
any subsidiary or affiliate in violation of this Agreement or violate Section 4
below and that the Company would by reason of such competition or violation be
entitled to preliminary or injunctive relief in a court of appropriate
jurisdiction, and Xxxxxxx further consents and stipulates to the entry of such
preliminary or injunctive relief in such a court prohibiting Xxxxxxx from
competing with the Company or any subsidiary or affiliate of the Company or
otherwise acting in violation of this Agreement upon an appropriate finding by
such court that Xxxxxxx has violated this Section 3 or 4.
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4. CONFIDENTIALITY. (a) Except as otherwise required by law, each of
the parties hereto shall keep the terms of this Agreement confidential. In
addition, Xxxxxxx shall keep confidential all information of a proprietary or
confidential nature belonging to the Company or any of its subsidiaries or
affiliates, including, but not limited to, business plans, files, records, data,
documents, plans, research, development, policies, customer or client lists,
price lists, the name and address of suppliers, customers or representatives, or
any other matters of any kind or description, relating to the products, devices,
suppliers, customers, clientele, sales or business of the Company or any of its
subsidiaries or affiliates, and shall promptly return to the Company all written
material and information that is, or comes into his possession or dominion,
concerning the Company or the business of the Company or its subsidiaries or
affiliates.
5. PUBLIC STATEMENTS. Neither IHS nor the Company or their respective
subsidiaries or affiliates shall disparage Xxxxxxx, and Xxxxxxx shall not
disparage the Company, IHS or any of their respective subsidiaries or affiliates
or their respective officers, directors, employees, partners or stockholders, at
any time, in any manner or in any respect; provided, that nothing contained in
this Agreement shall restrict the parties hereto from making any statements or
disclosures believed necessary to enforce in any judicial or similar proceeding
the provisions of this Agreement or as a party believes may be required by
applicable law.
6. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right
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or action which the Company may have against Xxxxxxx or others. In no event
shall Xxxxxxx be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to Xxxxxxx under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not Xxxxxxx
obtains other employment. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which Xxxxxxx may
reasonably incur as a result of any contest (regardless of the outcome thereof)
of the validity or enforceability of, or liability or entitlement under any
provision of this Agreement or any guarantee of performance thereof, unless such
contest is against IHS, the Company or any of their respective subsidiaries or
affiliates, in which case, each party shall pay their respective costs incurred
in connection with such contest, provided, however, that to the extent any
arbitrator or court shall determine that Xxxxxxx has prevailed as to the
material issues raised in determination of the dispute, the Company shall as
soon as practicable, but in no event later than 30 days from the date of
determination of such arbitrator or court, reimburse Xxxxxxx for his costs
incurred in connection with such contest.
7. CERTAIN EFFECTS. The invalidity or unenforceability of any
paragraph, term or provision of this Agreement shall in no way affect the
validity or enforceability of the remaining paragraphs, terms and provisions of
this Agreement. In the event of any such invalidity or unenforceability, it is
the parties' hereto intention and agreement that any such paragraph, term or
provision which is held or determined to be invalid or unenforceable, as
written, shall nonetheless be in force and binding to the fullest extent
permitted by law as though such paragraph, term or provision had been written in
such a manner and to such an extent as to be enforceable under the
circumstances. Without limiting the foregoing, with
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respect to any confidentiality requirement or restrictive covenant contained
herein, if it is determined that any such provision is excessive as to duration
or scope, it is intended that it nevertheless be enforced for such shorter
duration or with such narrower scope as will render it enforceable.
8. EXPENSES. The Company shall pay all legal expenses incurred by
Xxxxxxx with respect to this Agreement up to a maximum amount of $7,500.00.
9. SPLIT-DOLLAR LIFE INSURANCE. The Company shall continue to maintain
and fund two split dollar life insurance policies, each with a face amount of
Ten Million Dollars ($10,000,000) ($20,000,000 in the aggregate) on the joint
lives of the Executive and the Executive's spouse in accordance with the terms
of the Split Dollar Agreements, each dated as of December 8, 1995 between the
Company and Xxxxxx X. Xxxxxxxxx, as Trustee of the W.P.K. Irrevocable Trust I
and as Trustee of W.P.K. Irrevocable Trust II, each dated November 24, 1995 (the
"Split-Dollar Agreements") and the respective funding schedules applicable to
each agreement (copies of the Agreements and respective funding schedules are
attached hereto as Exhibit A). Notwithstanding anything in the Agreement to the
contrary, the obligation of the Company and any successor thereto to maintain
and fund the obligations under the split Dollar Agreements shall be independent
of any obligations of Xxxxxxx under this Agreement and shall be binding on the
Company and any successors (including, but not limited to, IHS and any and all
its successors) thereto for the entire period set forth in the funding schedule
attached hereto.
10. NOTICES. All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
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(a) delivered by hand, (b) sent by telecopier or mailed, certified or
registered, return receipt requested, or (c) when received by addressee, if sent
by Express Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addresses or telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate as to himself or itself or by notice to the other parties):
If to Xxxxxxx:
Xxxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
If to any other party hereto:
Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Executive Vice President
Xxxxxxxx Xxxxxx
General Counsel
with a copy to:
Blass & Xxxxxx
000 0xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxx
11. ENTIRE AGREEMENT. This Agreement is intended to express the
complete agreement and understanding among the parties hereto on the matters set
forth
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herein and to supersede any and all other agreements and understandings, whether
oral or written, between or among the parties hereto on the matters set forth
herein.
12. BINDING EFFECT. The rights and obligations of the parties under
this Agreement shall inure to the benefit of and shall be binding upon their
respective heirs, successors and legal representatives.
13. AMENDMENTS. This Agreement shall be amended or modified only by a
written instrument signed by the parties hereto. Nothing in this Agreement,
expressed or implied, is intended to confer upon any third person any rights or
remedies under or by reason of this Agreement.
14. SUCCESSORS.
(a) This Agreement is personal to Xxxxxxx and without the prior written
consent of the Company shall not be assignable by Xxxxxxx otherwise than by will
or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Xxxxxxx'x legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and IHS and its successors and assigns.
(c) The Company and IHS will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and IHS to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company and IHS would be required to perform it if no such
succession had taken place.
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15. GOVERNING LAW. This Agreement shall be construed under the laws of
the State of Florida applicable to agreements made and to be performed fully
therein, without regard to its conflicts of laws rules.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement.
17. SPECIFIC PERFORMANCE. The parties hereto acknowledge that money
damages may be an inadequate remedy for breach of this Agreement. Therefore, the
parties agree that any party may, in its sole discretion, apply to any
applicable court of competent jurisdiction to obtain specific performance of
this Agreement and injunctive relief against any breach hereof, in either case
without the posting of any bond or other security.
18. COOPERATION. Xxxxxxx shall cooperate with the Company (at no
expense to the Company) in connection with his transition from Chairman and
Chief Executive Officer to a consultant. Additionally, each of the parties to
this Agreement shall execute and deliver any and all other documents deemed
necessary by counsel to the Company or IHS to effectuate the terms, conditions
or intent hereof.
19. TERMINATION OF THE MERGER AGREEMENT. This Agreement shall
automatically terminate if and when the Merger Agreement is terminated.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
----------------------------------------
Xxxxxxx X. Xxxxxxx
WITNESS:
-----------------------------
Name:
RoTech Medical Corporation
By:
---------------------------------
Title:
WITNESS:
-----------------------------
Name:
Integrated Health Services, Inc.
By:
--------------------------------
Title:
WITNESS:
-----------------------------
Name:
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EXHIBIT A
As of July __, 1997
To the Board of Directors of RoTech:
Effective immediately, I hereby resign as chairman of the
board, as a member of the board of directors, as chief executive officer and as
an employee of the Company and its subsidiaries.
----------------------------------------
Xxxxxxx X. Xxxxxxx
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