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Exhibit
10.2
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“Agreement”), is made as of this 6th day
of November, 2007, by and between LOGISTICARE SOLUTIONS, LLC
, a Delaware limited liability company, with its principal office
located at 1800 Phoenix Boulevard, Suite 120, College Park, Georgia
30349, its successors and assigns (hereinafter collectively
referred to as “Company”), and JOHN L. SHERMYEN
, an individual residing at 11715 N.W. 1122 nd Terrace, Alachua, Florida 32615
(“Employee” and together with the Company, the
“parties”).
BACKGROUND
WHEREAS, Employee is
currently employed by Company as its President and Chief Executive
Officer (“CEO”); and
WHEREAS , Company is
contemplating a merger with a wholly owned subsidiary of The
Providence Service Corporation (“Providence”), a
Delaware corporation, with its head office located at 5524 East
Fourth Street, Tucson, Arizona (the “Transaction”);
and
WHEREAS , should
Company complete the Transaction, Providence will become the parent
company of Company; and
WHEREAS, should
Company complete the Transaction, Company desires to employ
Employee, and Employee desires to be employed by Company, all upon
the terms and conditions set forth in this Agreement;
and
WHEREAS, the execution
of this Agreement is a condition of the Transaction; and
NOW, THEREFORE , in
consideration of the facts, mutual promises, and covenants
contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Employment . The
Company hereby employs Employee and Employee hereby accepts
employment by the Company, for the period set forth in
Section 3 below and upon the terms and conditions set forth in
this Agreement, subject to earlier termination pursuant to
Section 6 below.
2. Office and Duties
.
(a) During the term of this
Agreement, Employee shall serve as CEO of the Company, and shall
report directly to the Chief Operating Officer (“COO”)
of Providence, and be subject to the COO of Providence’s
supervision, control and direction.
(b) In his capacity as CEO of
the Company, Employee shall have such authority, perform such
duties, discharge such responsibilities and render such services as
are customary to, and consistent with his position, subject to the
authority and direction of the COO of Providence, and shall perform
such additional duties and responsibilities as may be from time to
time assigned to him by the COO of Providence. In addition,
Employee acknowledges and agrees that he shall observe and comply
with all of the Company’s policies and procedures, observe
and comply with all of Providence’s policies and procedures,
and comply with all directives of the boards of directors of
Providence and the Company.
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(c) The Employee shall render
his services diligently, faithfully and to the best of his ability,
and shall devote substantially all of his working time, energy,
skill and best efforts to the performance of his duties hereunder,
in a manner that will further the business and interests of the
Company.
(d) During the term of this
Agreement, Employee shall not be engaged in any business activity
which, in the reasonable judgment of the COO of Providence,
conflicts with Employee’s duties hereunder, whether or not
such activity is pursued for pecuniary advantage.
3. Term . This
Agreement shall be effective for a term of two (2) years on
the terms and conditions set out herein (“Term”) from
the date on which the Transaction completes (“Effective
Date”) and ending two (2) years later, unless sooner
terminated as hereinafter provided. The Term shall be automatically
extended and renewed for a period of one (1) year from the end
of the Term (“Renewal Date”) unless either the Company
or Employee shall give written notice of non-renewal to the other
party at least six (6) months prior to the end of the Term, in
which event this Agreement shall terminate at the end of the Term.
Subject to the termination provisions contained herein, if this
Agreement is renewed on the Renewal Date for an additional one
(1) year period, it will automatically be renewed on the
anniversary of the Renewal Date and each subsequent year thereafter
(the “Annual Renewal Date”) for a period of one
(1) year , unless either party gives written notice of
non-renewal to the other party at least six (6) months prior
to any Annual Renewal Date, in which case the Agreement will
terminate on the Annual Renewal Date immediately following such
notice.
4. Compensation
.
(a) Base Salary . In
consideration of the services rendered by Employee to the Company
during the term hereof, Employee shall receive an annual base
salary of Two Hundred and Eighty-Five Thousand Dollars ($285,000)
(“Base Salary”), payable in equal periodic installments
in accordance with the Company’s regular payroll practices in
effect from time to time. Employee’s Base Salary shall be
reviewed by Providence’s Board and/or Compensation Committee
in or around April 2008 and thereafter in accordance with the
policies of the Company, and may be modified as a result of such
review at the sole discretion of Providence’s Board and/or
Compensation Committee.
(b) Bonus Plans/Incentive
Compensation Programs . In addition to Base Salary, during the
Term, Employee shall be eligible to participate in any bonus plans
or incentive compensation programs, if any, as may be in effect
from time to time, at a level consistent with his position and with
the Company’s then current policies and practices
(“Bonus”), with the exception of Company’s
Executive Deferred Compensation Plan unless amended to the
satisfaction of Providence prior to the Effective Date. In lieu of
continuing participation in the Company’s Executive Deferred
Compensation Plan (in the event that such plan is terminated,
frozen or otherwise unavailable to Employee), Employee, if
eligible, shall be entitled to participate in Providence’s
deferred compensation plans. In addition, the Employee shall be
entitled to an annual performance bonus based upon the
Employee’s individual performance and the overall performance
of the Company. Whether to award such performance bonus and the
amount thereof shall be subject to the sole discretion of
Providence’s Board and/or Compensation Committee.
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(c) Stock Options .
Employee currently holds 20,931 stock options pursuant to
Company’s Stock Option Plan. Prior to the Effective Date, the
Stock Options exist under Company’s Stock Option Plan. Such
Stock Options will be cancelled and exchanged for Providence common
stock as of the Effective Date of this Agreement in accordance with
the terms of the merger agreement governing the Transaction and the
Stock Option Cancellation and Exchange Agreement between the
Company and Employee attached as Exhibit A . Such Providence
common stock shall be subject to a Lock-Up Agreement between the
Company and Employee, attached as Exhibit B .
(d) Benefits . During
the Term, Employee shall also be entitled to receipt of benefits
substantially similar to those that are presently being provided by
Company to Employee, subject to any future modifications of such
plans (collectively, the “Benefits”) in the sole
discretion of Providence’s Board and/or Compensation
Committee.
(e) Vacation . During
the Term, Employee shall also be entitled to take vacation and
receive vacation pay substantially similar to that which is
presently provided by Company to Employee, subject to any future
modifications by the Company in the sole discretion of
Providence’s Board and/or Compensation Committee. Vacation
days which are not used during any calendar year may not be accrued
or carried-over to the next year, nor shall Employee be entitled to
compensation for unused vacation days.
(f) Business Expenses
. During the Term, the Company shall pay or reimburse Employee for
all reasonable expenses incurred or paid by Employee in the
performance of Employee’s duties hereunder, upon timely
presentation of expense statements or vouchers and such other
information as the Company may reasonably require and in accordance
with the generally applicable policies and practices of the
Company.
(g) Withholding . All
payments made pursuant to this Agreement shall be subject to such
withholding taxes as may be required by any applicable
law.
5. Representations of
Employee . Employee represents to the Company that:
(a) there are no restrictions, agreements or understandings
whatsoever to which Employee is a party that would prevent, or make
unlawful, his execution of this Agreement and his employment
hereunder; (b) his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which he is a
party, or by which he is bound; and (c) he is of full
capacity, free and able to execute this Agreement and to enter into
this Agreement with the Company.
6. Termination . This
Agreement and Employee’s employment hereunder shall continue
until terminated as provided herein. Upon termination of this
Agreement and Employee’s employment hereunder, Employee shall
immediately resign his position as a member of the Company’s
Board if he is serving in such capacity. For purposes of this
Agreement, a “Separation from Service” with
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respect to the Employee means the
Employee’s “separation from service,” as defined
in Treasury Regulations Section 1.409A-1(h). For purposes of
“termination of employment,” a complete and total
expectation that no further services will be performed shall be
required.
(a) Termination by Company
for Cause . The Company shall have the right to terminate this
Agreement and the Employee’s employment hereunder at any time
for “Cause”. For purposes of this Agreement, the term
“Cause” shall mean the following:
(i) Employee commits fraud or
theft against Providence, the Company or any of their respective
subsidiaries, affiliates, joint ventures and related organizations,
including any entity managed by the Company (collectively referred
to as “Affiliates”), or is indicted, convicted of, or
pleads guilty or nolo contendere to, a felony;
or
(ii) In carrying out his
duties hereunder, the Employee engages in conduct that constitutes
gross neglect or willful misconduct and that results, in either
case, in material economic harm to the Company or its Affiliates;
or
(iii) Employee materially
breaches any provision of this Agreement (including but not limited
to the restrictive covenants contained in Paragraph 8 below) or
breaches any fiduciary duty or duty of loyalty owed to the Company
or its Affiliates, and such breach continues uncured for a period
10 days after written notice from the Company to the Employee
specifying the failure, refusal, or violation and the
Company’s intention to terminate this Agreement for Cause;
or
(iv) Employee engages in
conduct tending to bring the Company or its Affiliates into public
disgrace; or
(v) Employee repeatedly
neglects or refuses to perform duties or responsibilities as
directed by the COO of Providence, or violates any express
direction of any lawful rule or regulation established by the
Company which is consistent with the scope of Employee’s
duties under this Agreement, and such failure, refusal, or
violation continues uncured for a period 10 days after written
notice from the Company to Employee specifying the failure,
refusal, or violation and the Company’s intention to
terminate this Agreement for Cause; or
(vi) Employee commits any
acts or omissions resulting in or intended to result in direct
material personal gain to the Employee at the expense of the
Company or its Affiliates; or
(vii) Employee materially
compromises trade secrets or other confidential and proprietary
information of the Company or its Affiliates.
“Cause” shall not
include a bona fide disagreement over a corporate policy, so long
as Employee does not willfully violate on a continuing basis
specific written directions from COO of Providence, which
directions are consistent with the provisions of this Agreement.
Action or inaction by Employee shall not be considered
“willful” unless done or omitted by him intentionally
and without his reasonable belief that his action or inaction was
in the best interests of the Company or its Affiliates, and shall
not include failure to act by reason of total or partial incapacity
due to physical or mental illness.
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(b) Termination by Company
upon the Death or Disability of Employee . The Company shall
have the right to terminate this Agreement and Employee’s
employment hereunder at any time upon the death or Disability of
Employee. The term, “Disability”, as used herein, means
any physical or mental illness, infirmity or incapacity which
prevents or significantly restricts Employee from performing the
essential functions of his job, with or without reasonable
accommodations, hereunder for a period of not less than one hundred
fifty (150) consecutive days or for an aggregate of one
hundred eighty (180) days during any period of twelve
(12) consecutive months. Periods where Employee can perform
the essential functions of his job with a reasonable accommodation
shall not be included in the determination of a Disability
hereunder. During any period of Disability, Employee agrees to
submit to reasonable medical examinations upon the reasonable
request, and at the expense, of the Company.
(c) Termination By Company
Without Cause . The Company shall have the right to terminate
this Agreement and Employee’s employment hereunder at any
time without Cause and/or without the occurrence of
Employee’s death or Disability upon thirty (30) days
written notice to Employee. The effective date of such termination
shall be after the completion of the thirty (30) day notice
period.
(d) Termination By
Employee For Good Reason . Employee shall have the right to
terminate this Agreement and his employment hereunder at any time
during the Term of this Agreement for “Good Reason”
upon sixty (60) days prior written notice to the
Company’s Board. The effective date of such termination shall
be after the completion of the sixty (60) day notice period.
For purposes of this Agreement, “Good Reason” shall
mean any of the following:
(i) the assignment to
Employee by the Company of any duties inconsistent with
Employee’s status with the Company or a substantial
alteration in the nature or status of Employee’s
responsibilities from those in effect on the Effective Date hereof,
or a reduction in Employee’s titles or offices as in effect
on the Effective Date hereof, except in connection with the
termination of his employment for Cause or Disability or as a
result of Employee’s death, or by Employee other than for
Good Reason, or the Company’s establishment of a new office
to which Employee may be asked to report (unless such relocation
would constitute “Good Reason” under
Section 6(d)(iii) hereof), or the Company’s hiring of a
President or other officer which may result in the reassignment of
some of Employee’s duties to someone in the Company below the
level of Employee (unless such reassignment would constitute
“Good Reason” under Section 6(d)(iv)
hereof).
(ii) a reduction by the
Company in Employee’s Base Salary as in effect on the
Effective Date or as the same may be increased from time to time
during the term of this Agreement;
(iii) a relocation of
Employee by the Company and for purposes of this Agreement, a
relocation to a Company office outside the greater metropolitan
area of Atlanta, Georgia;
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(iv) any material breach by
the Company of a material term or provision contained in this
Agreement, which breach is not cured within thirty (30) days
following the receipt by the Board of written notice of such breach
(it shall be deemed a material breach of this Agreement if the
Employee is required to report to a person below the rank of COO of
Providence; or
(v) the Company gives
Employee proper notice in accordance with Section 3 above that
the Agreement will not be extended or renewed for an additional one
(1) year period from the end of the Term or from the end of
any subsequent Annual Renewal Date.
(e) Termination by
Employee for Other than Good Reason . If Employee shall desire
to terminate his employment hereunder for other than Good Reason,
he shall first give the Company not less than ninety (90) days
prior written notice of termination. Upon a termination of
Employee’s employment with the Company under this
Section 6(e), the effective date of termination shall be the
date set forth in employee’s resignation notice (assuming
such date is in compliance with the notice provisions of this
Section 6(e)) or an earlier date after the Company’s
receipt of such notice as determined by the Company, in its sole
discretion, but not earlier than the date on which the Company
learned of Employee’s decision to terminate his employment
for other than Good Reason.
(f) Notice of
Termination . Any termination, except for death, pursuant to
this Section 6 shall be communicated by a Notice of
Termination. For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate
those specific termination provisions in this Agreement relied upon
and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Employee’s employment under the provisions so indicated. The
Notice of Termination shall also set forth that Employee’s
employment is terminated and be delivered in accordance with the
terms of this Agreement.
Notwithstanding anything to
the contrary set forth herein, the provisions of Sections 8, 9 and
10 shall survive the end of the Term, the non-renewal of the
Agreement, and/or the termination of Employee’s employment
hereunder for any reason, and shall remain in full force and effect
thereafter.
7. Payments Upon
Termination and Change in Control .
(a) Termination for
Cause . In the event Employee’s employment hereunder is
terminated for Cause, all of Employee’s rights to his Base
Salary, Benefits and Bonus, if any, shall immediately terminate as
of the date of such termination, except that Employee shall be
entitled to any earned and unpaid portion of his Base Salary and
accrued Benefits up to the date of termination, less all deductions
or offsets for amounts owed by Employee to the Company, which shall
be paid to Employee within thirty (30) days of the date of
termination. Employee shall not be entitled to any Bonus, prorated
or otherwise. The Company shall have no further obligations to
Employee under the Agreement.
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(b) Termination Due to
Death or Disability . In the event Employee’s employment
hereunder is terminated due to his death or Disability, all of
Employee’s rights to his Base Salary, Benefits and Bonus, if
any, shall immediately terminate as of the date of such
termination, except that Employee (or, in the event that
Employee’s employment hereunder is terminated due to
Employee’s death, Employee’s heirs, personal
representative or estate) shall be entitled to any earned and
unpaid portion of his Base Salary and accrued Benefits up to the
date of termination less all deductions or offsets for amounts owed
by Employee to the Company, and any earned and accrued Bonus
prorated through the date of termination, which shall be paid to
Employee (or his estate) in a lump sum within thirty (30) days
of the date of termination. The Company shall have no further
obligations to Employee under the Agreement.
(c) Termination By Company
Without Cause or By Employee For Good Reason . If the Employee
has a Separation from Service by reason of termination of his
employment by Company other than for Cause or the occurrence of
Employee’s death or Disability, or if Employee has a
Separation from Service by reason of resignation of his employment
for Good Reason, Employee shall be entitled to receive severance in
the amount of twelve (12) months of his Base Salary in effect
at the time of termination (so long as Employee is not in breach of
this Agreement) (“Severance Payment”), provided that
Employee executes, and does not revoke, a General Release, attached
hereto as Exhibit C , of all claims relating to his
employment and termination from employment in a form provided by
the Company. Subject to Section 9 hereof, the Company shall
pay the Severance Payment in equal installments based on the number
of regularly scheduled payroll periods (in effect as of the date of
the termination) during the Severance Period (The Severance Period
is a period of 12 months. The first day of the Severance Period
shall be determined by the Company which shall occur no later than
ninety (90) days after the termination and correspond to a
regularly scheduled payment date.), provided that (1) Employee
has delivered the General Release within such time as designated by
the Company, (2) the Company determines that the General
Release is legally binding on Employee and (3) Employee does
not revoke the General Release, and subject to the requirements
under Section 9(c) hereof. The first installment shall be paid
on the first day of the Severance Period and subsequent
installments on each regularly scheduled payroll date thereafter
until no additional amount is payable to the Employee. The
Severance Payment shall be subject to all applicable withholding
for federal, state, and local taxes. In the event of the
Employee’s death prior to receiving all due installment
payments of his/her Severance Payment, any remaining installments
thereof shall be paid to the Employee’s estate on the same
payment schedule as would have occurred, but for the death of the
Employee. In no event shall payment of any Severance Payment be
made prior to the effective date of termination or prior to the
expiration of the revocation period, if any, applicable to the
General Release. If Employee fails to deliver such legally binding
General Release by the due date designated by the Company, the
Company shall not have any obligation to make any Severance
Payments. Employee understands that should he fail or refuse to
execute the General Release provided by the Company, or revoke such
General Release, he shall not be entitled to the Severance Payment
under this section. The Company shall have no further obligations
to Employee under the Agreement.
(d) Termination By
Employee For Other Than Good Reason . In the event Employee
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