Exhibit 10.3
EMPLOYMENT AND NON-COMPETITION
AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION
AGREEMENT is executed as of the 31 st day of July 2008, and effective as of the
16 th
day of July 2008 (the “
Effective Date ”), by and between Addus HealthCare,
Inc., an Illinois corporation (the “ Company ”)
and Frank Leonard, an individual domiciled in the State of Illinois
(the “ Executive ”).
WHEREAS, the Company, its subsidiaries and affiliates
(collectively, the “ Addus HealthCare Group ”)
provide home health staffing and home care services, to
individuals, county and state governments, health maintenance
organizations, independent physician associations, insurance
companies, facilities, other business purchasers of such services,
and to the general public at large; and
WHEREAS, the Addus HealthCare Group is currently engaged
in the business of providing paraprofessional and professional home
care services under contracts with state and local government
agencies and contracts with private payors; and
WHEREAS, the Executive and the Company are desirous of
memorializing, in writing, all of their agreements with respect to
the Executive’s employment by the Company; and
WHEREAS, by virtue of the Executive’s employment by
the Company pursuant to the terms hereof, the Executive will obtain
and become familiar with certain confidential and proprietary
information relating to the Addus HealthCare Group; and
WHEREAS, the Company desires to protect the goodwill and
all proprietary rights and information of the Addus HealthCare
Group.
NOW, THEREFORE,
in consideration of the mutual
covenants and agreements set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
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1.
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Term of
Employment . The
Company hereby employs the Executive, and the Executive hereby
accepts continued employment by the Company, for the period
commencing as of the Effective Date of this Agreement and ending on
the fourth (4 th ) anniversary of the Effective Date, or on
such earlier date as provided pursuant to the terms and conditions
of this Agreement (the “ Initial Employment Term
”). At the end of the Initial Employment Term, this Agreement
shall automatically renew for successive one (1) year terms
(each, an “ Additional Employment Term ”, and
together with the Initial Employment Term, the “
Employment Term ”) unless the Company provides notice
to the Executive of its intention not to renew this Agreement at
least thirty (30) days prior to the expiration of the Initial
Employment Term or any Additional Employment Term. During the
Employment Term, the Executive shall (i) devote substantially
all of his professional time, loyalty and efforts to discharge his
duties hereunder on a timely basis; (ii) use his best efforts
to loyally and diligently serve the business and affairs of the
Addus HealthCare Group; and (iii) endeavor in all respects to
promote, advance and further the Addus HealthCare Group’s
interests in all matters.
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2.
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Employment Duties . The Company will employ the Executive as its
Chief Financial Officer. The Executive’s principal duties and
responsibilities shall be those duties and responsibilities
reflected in the employment description set forth on Exhibit
A hereto.
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3.
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Compensation . The Company will pay the Executive as follows
during the Employment Term:
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Base Salary
. Commencing on the Effective Date
of this Agreement, the Company shall pay the Executive a base
salary at the annual rate of Two Hundred and Fifteen Thousand
Dollars ($215,000) which shall be paid in accordance with the
normal payroll practices of the Company and shall be subject to
withholding for applicable Federal, State and local taxes.
Thereafter, the Executive’s base salary shall be subject to
review and adjustment by the Board of Directors of the Company (the
“ Board of Directors ”) on or about the
anniversary date of his original hiring by the Company for each
year during the Employment Term (as adjusted from time-to-time, the
“ Base Salary ”).
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(a)
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Bonus . The Executive, at the discretion of the Board
of Directors, shall be eligible (but not entitled) to receive an
annual bonus during each fiscal year in an amount as set forth on
Exhibit B hereto, which amount may be amended at the sole
discretion of the Board of Directors. All amounts payable pursuant
to this Section 3(b), if any, shall be paid within no more
than thirty (30) days after completion of the Company’s
audited financial statements for the then current fiscal year and
shall be subject to applicable withholding taxes. Bonus is not
salary and is earned on the day it is paid. To be eligible to
receive the bonus, the Executive must be employed and in good
standing and must not have given notice of termination on or prior
to such date.
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4.
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Expenses . It is recognized that the Executive in the
performance of his duties hereunder may be required to expend sums
for travel, entertainment and lodging. During the Employment Term,
the Company shall reimburse the Executive for reasonable business
expenses incurred by him during the Employment Term in connection
with the performance of his duties hereunder conditioned upon and
subject to the Company’s established policies and procedures,
including written receipt from the Executive of an itemized
accounting in accordance with the Company’s regular business
expense verification practices.
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5.
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Benefits . During the Employment Term, the Executive
shall be entitled to benefits consistent with benefits paid to
other similarly situated employees pursuant to the Company’s
administrative benefit plan, and in accordance with its policies,
which may change at the sole discretion of the Board of Directors.
Benefits shall be at least:
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(a)
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Three
(3) weeks paid vacation during the Executive’s first
five (5) years of employment and four (4) weeks paid
vacation during each subsequent year of employment. Vacation may be
carried over to a subsequent year of employment, up to a maximum of
two (2) full years of accrued vacation time thereafter (i.e.,
no more than six weeks during the Executive’s first five
years and no more than eight weeks during the Executive’s
subsequent years).
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(b)
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Five
(5) days personal/sick leave per year, with pay. Personal/sick
days may be carried over to a subsequent year of employment, up to
a maximum of two (2) full years of accrued personal/sick days
(i.e., no more than ten days).
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(c)
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Six Company
holidays, plus two floating holidays.
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(d)
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Coverage under
the Company’s Health Benefit Plan, which may change, at the
sole discretion of the Board of Directors, from time to time. The
Company will cover the Executive and his dependents, if any, to the
same extent and according to the same terms as the Company’s
other executives are covered.
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(e)
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Life insurance
policy with a face amount of up to five (5) times the Base
Salary, provided that the Company shall not be required to spend
greater than three percent (3%) of the Base Salary in
purchasing such insurance policy.
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(f)
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Short-term and
long-term disability insurance to the same extent and according to
the same terms as the Company’s other executives are
covered.
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6.
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Termination by Company
.
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(a)
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The Company may
terminate the Executive’s employment hereunder at any time
for reasonable cause. The term “reasonable cause” shall
be limited to the following:
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(i) The Executives dies or the
Executive is physically or mentally disabled (“
Disability ”) so that the Executive is or, in the
opinion of an independent physician retained by the Company for
purposes of this determination will be, unable to perform his
duties in a manner satisfactory to the Company for a period of
ninety (90) days out of any one hundred eighty
(180) consecutive-day period (in which event the Executive
shall be deemed permanently disabled);
(ii) A material breach or omission
by the Executive of any of his duties or obligations under this
Agreement (except due to Disability);
(iii) The Executive shall engage in
any action that materially damages, or that may reasonably be
expected to materially damage, the Addus Healthcare Group or the
business or goodwill thereof;
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(iv) The Executive shall breach his
fiduciary duty to the Addus Healthcare Group;
(v) The Executive shall commit any
act involving fraud, the misuse or misappropriation of money or
other property of the Addus Healthcare Group, a felony, habitual
use of drugs or other intoxicants or chronic
absenteeism;
(vi) Gross negligence or willful
misconduct by the Executive;
(vii) The Executive shall commit
acts constituting gross insubordination, such as, without
limitation, the intentional disregard of any reasonable directive
of the Company’s President or Chief Executive Officer (the
“ CEO ”) or the Board of Directors;
and
(viii) The Executive shall fail to
perform any material duty in a timely and effective manner and
shall fail to cure any such performance deficiency after receipt of
written notice of the deficiency from the CEO or Board of
Directors, which notice shall designate the period of time within
which the performance deficiency must be cured to the satisfaction
of the CEO or the Board of Directors, as applicable, in order to
prevent a termination for reasonable cause; provided, however, that
Executive shall only be permitted the opportunity to cure
performance deficiency two times in any twelve-month rolling
period.
Termination of the Executive’s
employment for reasonable cause shall terminate the Employment Term
but shall not affect the Executive’s obligations pursuant to
Section 9 hereof, which obligations shall remain in effect for
the period therein provided.
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(b)
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The Company may
terminate the Executive’s employment hereunder at any time
for any reason other than reasonable cause. If the Company
terminates the Executive’s employment hereunder upon less
than thirty (30) days notice, the Company shall pay the
Executive a pro rata portion of his salary and shall continue to
provide the benefits described in Sections 3 and 5, respectively,
for the period of deficient notice.
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7.
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Termination by the Executive
. The Executive may terminate his
obligations hereunder upon not less than thirty (30) days
prior written notice to the Company. If the Executive terminates
his employment hereunder upon less than thirty (30) days
notice, the Executive shall pay the Company a pro rated portion of
his salary and benefits described in Sections 3 and 5,
respectively, for the period of deficient notice. The Company
(a) at its sole option, may waive all or any portion of such
notice requirement and (b) shall waive all or a portion of
such notice requirement upon the Executive’s payment of that
portion of the Executive’s annual base salary that would
otherwise be paid to the Executive during the remaining notice
period.
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Termination of the Executive’s
employment by the Executive shall terminate the Employment Term,
but shall not affect the Executive’s obligations pursuant to
Section 9 hereof which obligations shall remain in effect for
the period therein provided.
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8.
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Rights
and Obligations Upon Termination .
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(a)
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If the
Executive’s employment is terminated by the Company pursuant
to Section 6(a) hereof, the Executive shall have no further
rights against the Addus HealthCare Group hereunder, except for the
right to receive:
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(i) Any unpaid base salary under
Section 3(a) hereof for any period prior to the effective date
of termination;
(ii) If applicable, a pro rata
payment for bonus under Section 3(b) hereof for any period
prior to the effective date of such termination;
(iii) Any accrued but unpaid
benefits under Section 5 hereof.
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(b)
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If the
Executive’s employment is terminated by the Company pursuant
to Section 6(b) hereof, the Executive shall be entitled to, in
lieu of any further salary payments to the Executive for periods
subsequent to the date of termination;
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(i) Any unpaid base salary under
Section 3(a) hereof for any period prior to the effective date
of termination;
(ii) Any accrued but unpaid benefits
under Section 5 hereof; and
(iii) Conditioned upon
Executive’s strict compliance with the post-employment
restrictions described in Section 9 below, severance pay
(“ Severance Pay ”) in the total amount equal to
(A) one-half ( 1 / 2
) of the Executive’s
Annual Cash Compensation to be paid in equal installments on the
Company’s regular pay dates for six (6) months following
termination of the Executive’s employment by the Company
(subject to customary withholding and payroll taxes and early
termination upon the Executive’s employment with a new
employer), plus continuation of all benefits at the level
then offered to and enrolled in by the Executive, until the earlier
of (x) six (6) months following the termination of the
Executive’s employment by the Company or (y) the date
that the Executive is eligible to receive coverage and benefits
from a new employer; provided , however , that
(A) if the Executive remains continuously employed by the
Company through the date that is twelve (12) months from the
Effective Date, the severance benefits contained in this clause
(iii) shall be automatically increased from one-half (
1
/ 2 ) of
the Executive’s Annual Cash Compensation to three-quarters
( 3
/ 4 ) of
the Executive’s Annual Cash Compensation, to be paid in equal
installments on the Company’s regular pay dates (subject to
customary withholding
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and payroll taxes and early
termination upon the Executive’s employment with a new
employer) for twelve (12) months following termination of the
Executive’s employment by the Company plus
continuation of all benefits for such twelve-month period; and
(B) for every twelve-month period the Executive remains
continuously employed by the Company thereafter, the Executive
shall receive one (1) additional month of severance (i.e., an
additional one-twelfth ( 1 / 12
) of the Executive’s
Annual Cash Compensation) up to a total of twelve (12) total
months of severance (i.e., up to an amount not to exceed one
(1) year of the Executive’s Annual Cash Compensation),
to be paid in equal installments over the then applicable period
following termination of the Executive’s employment by the
Company on the Company’s regular pay dates (subject to
customary withholding and payroll taxes and early termination upon
the Executive’s employment with a new employer) plus
continuation of all benefits for such additional
month(s).
For purposes of this Agreement,
“ Annual Cash Compensation ” shall
mean the sum of (a) the highest annual Base Salary in effect
for the Executive and (b) the greater of (i) the
Executive’s last year’s bonus, if any, or (ii) the
annualized amount of the Executive’s current year’s
target bonus; provided, however, neither clause (i) nor
(ii) shall exceed fifty percent (50%) of the
Executive’s current annual Base Salary.
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(c)
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If the
Executive’s employment is terminated by the Executive
pursuant to Section
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