Exhibit 10.5
EMPLOYMENT AND NON-COMPETITION
AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION
AGREEMENT is executed as of the 10 th day of April, 2008, and effective as of the
1 st
day of October, 2007, by and among
Addus Management Corporation, a Delaware corporation (the “
Company ”), Addus HealthCare, Inc., an Illinois
corporation (“ Addus ”) and Sharon Rudden, an
individual domiciled in the State of Tennessee (the “
Executive ”).
WHEREAS , the Company, Addus, their subsidiaries and
affiliates (collectively, the “ Addus HealthCare Group
”) provide home health staffing, 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 date of this Agreement (“
Commencement Date ”) and ending on the fourth
(4 th
) anniversary of the
Commencement 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 her professional time, loyalty and efforts to
discharge her duties hereunder on a timely basis; (ii) use her
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
Vice President of Home Health Services. 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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(a)
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Base
Salary . Commencing
on the date of this Agreement, or sooner if applicable by prior
agreement, the Company shall pay the Executive a base salary at the
annual rate of (i) One Hundred and Seventy Five Thousand
Dollars ($175,000) for the first twelve (12) months of
continuous employment, 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.
Beginning on the first anniversary of the Commencement Date, the
Executive’s base salary shall be subject to review and
adjustment by the Board of Directors of Addus (the “ Board
of Directors ”) on or about the anniversary date of her
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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(b)
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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) shall be paid within no more than thirty
(30) days after completion of Addus’ 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 her 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 her during the Employment Term in connection
with the performance of her duties hereunder conditioned upon and
subject to the Addus’ established policies and procedures,
including written receipt from the Executive of an itemized
accounting in accordance with the Addus’ 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 Addus’
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 Addus’ 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 her 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 her
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 her duties or obligations under this
Agreement (except due to Disability);
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(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;
(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 which is materially injurious to the
Addus HealthCare Group;
(vii) The Executive shall commit
acts constituting gross insubordination, such as, without
limitation, the intentional disregard of any reasonable directive
of Addus’ Chief Executive Officer (the “CEO”),
Chief Operating Officer (the “COO”) 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 upon not less than
thirty (30) days prior written notice. 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 her 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 her obligations hereunder upon not less
than thirty (30) days prior written notice to the Company. If
the Executive terminates her employment hereunder upon less than
thirty (30) days notice, the Executive shall pay the Company a
pro rated portion of her salary and benefits described in Sections
3 and 5, respectively, for the period of deficient
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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) 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) 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; and
(iv) Conditioned upon
Executive’s strict compliance with the post-employment
restrictions described in Section 9 below, (A) Severance
Pay in the total amount equal to one-quarter (
1
/ 4 ) of
the Executive’s Annual Cash Compensation (as hereinafter
defined) (subject to customary withholding and payroll taxes) to be
paid in equal installments on the Company’s regular pay dates
for the earlier of (x) three (3) months following
termination of the Executive’s employment by the Company, and
(y) the date that the Executive commences employment with a
new employer, plus (y) continuation of all benefits at the
level then offered to and enrolled in by the Executive, until the
earlier of (x) three (3) months following the termination
of the Executive’s employment by the Company or (B) the
date that the Executive is eligible to receive coverage and
benefits from a new employer; provided, however , that
(A) if the
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Executive remains continuously
employed by the Company through the date that is twelve
(12) months from the Commencement Date, the severance benefits
contained in this clause (iv) shall be automatically increased
from one-quarter ( 1 / 4
) of the Executive’s
Annual Cash Compensation to 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); 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).
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 7 hereof, the Executive or her estate
shall have no further rights against the Addus HealthCare Group,
except for the right to receive, with respect to the period prior
to the effective date of termination;
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(i) Any unpaid base salary under
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