Exhibit 10.15
EXECUTION COPY
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made and entered
into this 4th day of April, 2003, by and between Rotech Healthcare
Inc., a Delaware corporation (together with its successors and
assigns, the “ Company ”), and Michael R.
Dobbs (the “ Executive ”).
WHEREAS, the Company desires to
employ the Executive and to enter into an agreement embodying the
terms of such employment (this “ Agreement
”), and the Executive desires to accept such employment and
enter into this Agreement.
NOW, THEREFORE, in consideration of
the mutual promises and covenants set forth herein and for other
good and valuable consideration, the Company and the Executive (the
“ parties ”), hereby agree as
follows:
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1
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Employment; Duties; Acceptance and
Term
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1.1
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The Company
hereby employs the Executive as Chief Operating Officer (“
COO ”) and the Executive agrees to be so
employed during the Employment Period (as defined in Section 1.4
hereof), and as such the Executive shall report directly to the
Chief Executive Officer & President (“ CEO
”) and the Board of Directors of the Company (the “
Board ”).
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1.2
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During the
Employment Period (as defined in Section 1.4 hereof), the Executive
will be responsible for managing the operations of the Company and
such other or changed responsibilities as shall be determined from
time to time by the CEO and the Board. All staff in the
Company’s field offices are expected to report to the
Executive through their managers or as otherwise determined by the
CEO. The Executive shall take all such actions as may be required
to fulfill his duties as COO or which may be necessary to carry out
any additional responsibilities as may be given to the Executive by
the CEO and the Board, including responsibilities concerning or
related to Company subsidiaries and or affiliates (“
Group Affiliate ”).
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1.3
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The Executive
shall devote his full business time and attention to the business
of the Company, including such additional duties and
responsibilities to which he is assigned by the CEO and the Board,
during the Employment Period and shall not, during such period, be
engaged in any other business activity, whether or not such
business activity is pursued for gain, profit or other pecuniary or
non-pecuniary advantage, without the prior written and informed
consent of the Board. Notwithstanding the above, the Executive may
(a) serve on the boards of directors of charitable or other
organizations and companies not competing with the Company or any
Group Affiliate or as an unpaid officer of a charitable
organization, (b) manage his own personal investments and affairs,
provided , however ,
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that such activities do not
interfere with the execution of the Executive’s duties
hereunder, do not otherwise violate any provision of this Agreement
or otherwise conflict in any way with the business of the Company
or any Group Affiliate. The Executive shall not accept, directly or
indirectly, any compensation, remuneration or other thing of value
from any individual or entity which has or may have the prospect of
a business relationship with the Company or any Group Affiliate,
other than a gift of immaterial value, without the prior written
and informed consent of the Board.
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1.4
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Unless earlier
terminated pursuant to Section 3 of this Agreement, the
Executive’s employment with the Company under this Agreement
shall be for an initial term of four (4) years, commencing
effective January 13, 2003 and continuing until the four (4) year
anniversary of the actual date the Executive commences his
employment (the “ Initial Employment Period
”). The term of the Executive’s employment under this
Agreement shall be automatically renewed for additional one-year
terms (each a “ Renewal Period ”) upon
the expiration of the Initial Employment Period or any Renewal
Period unless the Company or the Executive delivers to the other,
at least one hundred eighty (180) days prior to the expiration of
the Initial Employment Period or the then current Renewal Period,
as the case may be, a written notice specifying that the term of
the Executive’s employment will not be renewed at the end of
the Initial Employment Period or such Renewal Period, as the case
may be. The period from the actual date the Executive commences his
employment with the Company until the fourth anniversary of said
date or, in the event that the Executive’s employment
hereunder is earlier terminated as provided in Section 3 hereof or
renewed as provided in this Section 1.4, such shorter or longer
period, as the case may be, is hereinafter called the “
Employment Period ”.
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1.5
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The Executive
acknowledges and agrees that he shall be required to observe all
lawful rules and policies of the Company.
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1.6
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The Executive
agrees that he shall not knowingly participate in any activity that
is detrimental to the interests of the Company, interferes with the
performance of his duties hereunder or otherwise constitutes a
conflict of interest.
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1.7
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The
Executive’s primary location of employment shall be at the
Company’s corporate headquarters located in Orlando,
Florida.
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2
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Compensation and Benefits
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2.1
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During the
Employment Period and in consideration of the services performed by
the Executive for the Company, the Company will pay to the
Executive a Base Salary at an annual rate of Four Hundred Thousand
U.S. Dollars ($400,000.00), subject to applicable payroll
withholdings and deductions, to be paid in substantially equal
installments pursuant to the Company’s standard payroll
practice (such salary, as increased from time to time, being the
“ Base Salary ”). The Executive’s
Base Salary shall be reviewed by the Board or the compensation
committee thereof (the “ Compensation Committee
”) a minimum of one time each year commencing on the one year
anniversary of the Commencement Date.
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2.2
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In addition to
Base Salary, the Executive shall be eligible to receive an annual
bonus targeted at one hundred percent (100%) of his Base Salary
(“ Target Bonus ”). The Board and/or the
Compensation Committee, at its or their discretion, in conjunction
with non-binding consultation with the Executive, shall determine
the exact amount of such bonus, if any, based on Company and
individual performance goals, criteria and targets established by
the Board and/or the Compensation Committee, which terms shall be
disclosed to the Executive in writing within one hundred and twenty
(120) days of the Effective Date (as defined below) of this
Agreement and thereafter on an annual basis. The annual incentive
bonus provided for in this Section 2.2 may exceed the Target Bonus
if the Board and/or the Compensation Committee determine(s) that
the Executive and the Company’s performance exceeded the
targeted levels. Such Target Bonus shall be payable within ninety
(90) days of the close of each calendar year during the Employment
Period. The Board and/or the Compensation Committee shall review
the Target Bonus and related terms on an annual basis and may
increase (but not decrease) the Target Bonus.
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2.3
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The Company
shall pay or reimburse the Executive for all reasonable expenses
actually incurred or paid by him during the period of his
employment hereunder in the performance of his services under this
Agreement, upon timely presentation of expense statements or
vouchers or such other supporting information as the Company may
require.
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2.4
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The Company
shall purchase the Executive’s BMW automobile at book value
as determined by GECC Fleet Services, the Company’s leasing
vendor. Following the purchase, the Executive will be entitled to
use of the vehicle during the Employment Term and the Company shall
reimburse the Executive for all normal and customary expenses
associated with the operation of such automobile (e.g., insurance,
gasoline and maintenance).
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2.5
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The Company
shall provide to the Executive medical and disability benefits and
insurances and coverage under applicable employee benefit plans
provided generally to senior executives of the Company, including,
but not limited to, life insurance, accident, medical, dental,
disability and retirement plans and programs, pursuant to the
terms, conditions and limitations of the Company’s plans and
its regulations then in effect and as they may be modified from
time to time; provided , however , that because the
terms of the Executive’s severance package is covered by this
Agreement, he is not eligible to participate in or for coverage
under any Company separation, severance or change of control plan,
policy or benefit or similar program, unless such program or policy
explicitly states that it will apply to the Executive without
limitation under this Section 2.5 of the Agreement.
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2.6
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The Executive
shall be entitled to non-cumulative paid vacation in the amount of
four (4) weeks of paid vacation per calendar year. No more than two
(2) weeks of accrued but unused vacation in each calendar year
shall be carried forward to the next year; provided ,
however , that at no time during the Employment Period,
regardless of the amount of vacation accrued by the Executive,
shall the Executive be entitled to take more than six
(6)
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weeks of vacation in any single
calendar year. The Executive shall not be entitled to receive a
payment for any accrued but unused vacation unless and except as
expressly set forth in this Agreement. The Executive will schedule
his vacations with the CEO and subject to the operating needs of
the Company.
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2.7
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The Board has
approved and the Executive shall be issued pursuant to an agreement
(the “ Stock Option Agreement ”) a stock
option to purchase 400,000 shares of the Company’s common
stock, $0.01 par value per share (the “ Options
”), pursuant to the Rotech Healthcare Inc. 2002 Stock Option
Plan (the “ Plan ”).
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(a) Vesting; Exercisability .
The Options shall vest (and thereby become exercisable) over a
period of four (4) years pursuant to the terms of the Stock Option
Agreement and the Plan; provided , however , that, on
the first anniversary of the Effective Date of this Agreement,
75,000 of the Options may be cancelled by the Board of Directors of
the Company in its reasonable discretion based upon
performance.
(b) Change of Control . In
the event of a Change of Control, the Options shall immediately
become fully vested and exercisable. For purposes of this
Agreement, a “ Change of Control ” shall
be deemed to have occurred if, after the Effective Date of this
Agreement, there shall have occurred any of the following: (i) any
“ person ,” as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
“ Exchange Act ”), other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a Group Affiliate, or any
company owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, acquires beneficial ownership (as defined
under Section 13(d) of the Exchange Act) of voting securities of
the Company and immediately thereafter is a “ 50%
Beneficial Owner .” For purposes of this provision, a
“ 50% Beneficial Owner ” shall mean a
person who is the “ beneficial owner ”
(as defined under Section 13(d) of the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s
then-outstanding voting securities; provided ,
however , that the term “ 50% Beneficial
Owner ” shall not include any person who was
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beneficial owner of outstanding
voting securities of the Company at the Effective Date (an “
Existing Shareholder ”), including any group
that may be formed which is comprised solely of Existing
Shareholders or any affiliate of an Existing Shareholder to whom
voting securities may be transferred if and for so long as the
Existing Shareholder remains an indirect beneficial owner of the
voting securities following such transfer, unless and until such
time after the Effective Date as any such Existing Shareholder
shall have acquired beneficial ownership (other than by means of a
stock dividend, stock split, gift, inheritance or receipt of
securities in compensation for individual services as a director or
officer of the Company) of any additional voting securities of the
Company; (ii) during any period of two (2) consecutive years
commencing on or after the Effective Date, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a “ person
” (as defined above) who has entered into an agreement with
the Company to effect a transaction described in subsections (i),
(iii) or (iv) of this definition) whose election by the Board or
nomination for election by the Company’s shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved (the “ Continuing
Directors ”), cease for any reason to constitute at
least a majority thereof; (iii) the shareholders of the Company
have approved a merger, consolidation, recapitalization, or
reorganization of the Company, or a reverse stock split of any
class of voting securities of the Company, or the consummation of
any such transaction if shareholder approval is not obtained, other
than any such transaction which would result in at least 50% of the
combined voting power of the voting securities of the Company or
the surviving entity outstanding immediately after such transaction
being beneficially owned by persons who together beneficially owned
at least 80% of the combined voting power of the voting securities
of the Company outstanding immediately prior to such transaction
with the relative voting power of each such continuing holder
compared to the voting power of each other continuing holder not
substantially altered as a result of the transaction; provided
that, for purposes of this Section 2.7(b)(iii), such continuity of
ownership (and preservation of relative voting power) shall be
deemed to be satisfied if the failure to meet such 50% threshold
(or to substantially preserve such relative voting power) is due
solely to the acquisition of voting securities by an employee
benefit plan of the Company or Group Affiliate, such surviving
entity or a subsidiary thereof; and provided further, that, if
consummation of the corporate transaction referred to in this
Section 2.7(b)(iii) is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency or approval of the shareholders of another entity or other
material contingency, no Change of Control shall occur until such
time as such consent and approval has been obtained and any other
material contingency has been satisfied; or (iv) the shareholders
of the Company have approved a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets (or any
transaction having a similar effect); provided that, if
consummation of the transaction referred to in this Section
2.7(b)(iv) is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency or approval of the shareholders of another entity or other
material contingency, no Change of Control shall occur until such
time as such consent and approval has been obtained and any other
material contingency has been satisfied.
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The foregoing notwithstanding, a
transaction shall not constitute a Change of Control if its sole
purpose is to change the state of the Company’s
incorporation. In addition, an initial public offering (“
IPO ”) of the securities of the Company shall
not constitute a Change of Control for purposes of this
Agreement.
(c) IPO . In the event of an
IPO, the vesting of the Options shall accelerate by one (1)
year.
(d) Pricing of Options . The
exercise or strike price of the Options shall be $17 per
share.
(e) General . Except as
otherwise provided for in this Agreement, the terms and conditions
regarding vesting, transfer, exercise and termination of the Option
shall be set forth within and governed by the Stock Option
Agreement and the Plan. The Executive shall be eligible for grants
of additional stock options during the Employment Period, in
accordance with the terms of Company plans and determinations of
the administrators of such plans
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2.8
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The Executive
agrees to permanently relocate to the Orlando, Florida metropolitan
area by no later than May 1, 2003. The Company will reimburse the
Executive for all reasonable and customary real estate brokerage
commissions and moving expenses incurred by the Executive with
respect to the sale of his home in California as well as any loan
origination fees. In addition, the Company will pay to the
Executive one (1) months’ base salary to cover miscellaneous
costs and expenses associated with this relocation. The amount of
relocation expenses and payments actually paid to the Executive
pursuant to this paragraph shall be appropriately grossed up by the
Company with all withholding taxes with respect thereto to be paid
by the Company on behalf of the Executive.
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2.9
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Nothing
contained herein shall prevent the Company from modifying or
terminating at any time any Company-wide plan, policy ,
benefit or program. However, the Company may also make available
other policies, benefits or programs.
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3
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Termination
of Employment Relationship
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3.1
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The
Executive’s employment with the Company shall automatically
terminate, and the Employment Term shall thereupon
terminate:
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3.1.1
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Upon the
Executive’s death;
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3.1.2
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Upon the
Company’s written notice to the Executive (or his guardian if
applicable) of the termination of his employment due to Incapacity
(as that term is defined hereinafter);
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3.1.3
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In the event
this Agreement is not renewed by the Company at the expiration of
the Initial Employment Period or any Renewal Period, if applicable,
following delivery by the Company to the Executive of the
non-renewal notice pursuant to Section 1.4 above;
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3.1.4
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Upon the
Company’s written notice to the Executive of the termination
of his employment for Cause (as that term is defined below),
provided that termination will deemed to be under this Section
3.1.4 only if Cause in fact exists;
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3.1.5
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Upon not less
than thirty (30) days’ written notice from the Company to the
Executive of the termination of his employment without
Cause;
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3.1.6
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Upon the
termination of the Executive’s employment by the Executive
for Good Reason (as defined below);
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3.1.7
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Upon not less
than thirty (30) days’ written notice from the Executive to
the Company of his voluntary resignation, if the termination is not
otherwise subject to Section 3.1.6; provided ,
however , that such voluntary resignation shall not relieve
or release the Executive from any breach of this Agreement at or
prior to the time of such resignation; or
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3.1.8
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Upon the
closing of a Change of Control (as that term is defined in Section
2.7(b), above) and the payment to the Executive of the Separation
Benefit (as that term is defined in Section 4.2, below).
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3.2
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As used herein,
the following terms shall have the meanings set forth
below:
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3.2.1
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For purposes of
this Agreement “ Cause ” shall be limited
to the following: (a) the conviction of the Executive, or the entry
by the Executive of a plea of guilty or nolo contendere to
any felony under the laws of the United States or any state or
political subdivision thereof, (b) the Executive’s engagement
in conduct constituting breach of fiduciary duty, willful
misconduct or gross negligence relating to the Company or the
performance of the Executive’s duties (including acts of
employment discrimination or sexual harassment) or fraud, (c) the
Executive’s breach of a
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