Exhibit 10.20
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT is made and entered into this 31st day of
January, 2005, 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 and the
Executive (the “ parties ”) entered into
an Employment Agreement dated April 4, 2003 (the “
Original Agreement ”), by which the Executive
became Chief Operating Officer of the Company;
WHEREAS, an Addendum to the
Employment Agreement dated April 4, 2003 between Rotech Healthcare
Inc. and Michael R. Dobbs was entered into by the parties in March
2004 (the “ Addendum ”) to provide for
certain payments to be made to the Executive in the event that the
Executive should incur liability for certain excise taxes under
Section 4999 of the Internal Revenue Code of 1986, as amended, as a
result of the payment of certain benefits to the Executive
following a change of control of the Company;
WHEREAS, the Company desires to
continue to employ and the Executive desires to continue his
employment with the Company as its Chief Operating Officer pursuant
to the terms and conditions of this First Amended and Restated
Employment Agreement (the “ Agreement
”);
WHEREAS, the Original Agreement is
hereby replaced and superceded by this Agreement; and
WHERAS, the Addendum shall survive
and not be superceded or replaced by this Agreement.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
hereby agree as follows:
|
1
|
Employment;
Duties; Acceptance and Term
|
|
1.1
|
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 ”).
|
|
1.2
|
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
|
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
1
|
|
|
|
|
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 ”).
|
|
1.3
|
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, and (b) manage his own personal investments and
affairs; provided , however , 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.
|
|
1.4
|
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 on
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 and
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 ”.
|
|
1.5
|
The Executive
acknowledges and agrees that he shall be required to observe all
lawful rules and policies of the Company.
|
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
2
|
|
|
|
1.6
|
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.
|
|
1.7
|
The
Executive’s primary location of employment shall be at the
Company’s corporate headquarters located in Orlando,
Florida.
|
|
2
|
Compensation
and Benefits
|
|
2.1
|
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 Eighty
Thousand U.S. Dollars ($480,000.00), 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.
|
|
2.2
|
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.
|
|
2.3
|
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.
|
|
2.4
|
During the
Employment Period, the Executive will be entitled to use the BMW
vehicle previously purchased by the Company from the Executive 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).
|
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
3
|
|
|
|
2.5
|
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.
|
|
2.6
|
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) 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.
|
|
2.7
|
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 ”).
|
(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%
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
4
|
|
|
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 a 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
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
5
|
|
|
|
|
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.
|
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
|
2.8
|
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.
|
|
2.9
|
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.
|
|
3
|
Termination
of Employment Relationship
|
|
3.1
|
The
Executive’s employment with the Company shall automatically
terminate, and the Employment Term shall thereupon
terminate:
|
|
3.1.1
|
Upon the
Executive’s death;
|
|
3.1.2
|
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);
|
|
|
|
|
|
|
|
Michael R. Dobbs – First
Amended
and Restated Employment
Agreement
|
|
6
|
|
|
|
3.1.3
|
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;
|
|
3.1.4
|
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;
|
|
3.1.5
|
Upon not less
than thirty (30) days’ written notice from the Company to the
Executive of the termination of his employment without
Cause;
|
|
3.1.6
|
Upon the
termination of the Executive’s employment by the Executive
for Good Reason (as defined below);
|
|
3.1.7
|
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 Agreementat or
prior to the time of such resignation; or
|
|
3.1.8
|
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).
|
|
3.2
|
As used herein,
the following terms shall have the meanings set forth
below:
|
|
3.2.1
|
For purposes of this Agreement
“ Cause ” shall be limited to the
following: (a) the conviction of the Executive, or the entry by
the
|
|
