EXHIBIT 10.5

Final Execution Copy

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”), dated effective April 2,
2007, is by and between RADIATION THERAPY SERVICES, INC., a Florida corporation,
(“Company”), and David N.T. Watson (“Executive”).

WHEREAS, the Company is engaged in the business of providing radiation therapy
services to cancer patients; and

WHEREAS, the Company wishes to assure itself of the services of the Executive
for the period provided in this Agreement and the Executive is willing to serve
in the employ of the Company for such period upon the terms and conditions
hereinafter set forth.

NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties, intending to be legally bound, hereby agree as follows:

1. EMPLOYMENT. The Company hereby agrees to employ the Executive upon the terms
and conditions herein contained, and the Executive hereby agrees to accept such
employment for the term described below. The Executive agrees to serve initially
as the Company’s Executive Vice President – Finance until the retirement of the
Company’s current Chief Financial Officer and have the duties and
responsibilities as may be reasonably assigned to him by the Chief Executive
Officer or the Board of Directors. Effective upon the specific date which is
next day after the earlier of a) the date the Company’s current Chief Financial
Officer consents to the transition of the Chief Financial Officer position to
the Executive or b) June 21, 2007, the Executive agrees to serve as the
Company’s Chief Financial Officer during the term of this Agreement. As Chief
Financial Officer, the Executive shall have the authorities, functions, powers,
duties and responsibilities that are customarily associated with such position
and as the Chief Executive Officer or the Board of Directors may reasonably
assign to him from time to time consistent with such position.

Throughout the term of this Agreement, the Executive shall devote his best
efforts and substantially all of his business time and services to the business
and affairs of the Company; provided however, that nothing herein shall preclude
Executive from serving or continuing to serve on the boards or advisory
committees of medical, charitable or other similar organizations.

2. TERM OF AGREEMENT. The initial three (3) year term of employment under this
Agreement shall commence as of the date set forth above (the “Effective Date”).
After the expiration of such initial 3 year employment period, the term of the
Executive’s employment hereunder shall automatically be extended without further
action by the parties for successive one (1) year renewal terms, provided that
if either party gives the other party at least one hundred twenty (120) days
advance written notice of his or its intention to not renew this Agreement for
an additional term, the Agreement shall terminate upon the expiration of the
current term.

Notwithstanding the foregoing, either party shall be entitled to terminate this
Agreement immediately, subject to any continuing obligations to make any
payments or reimbursements required under this Agreement.

 

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3. EXECUTIVE COMPENSATION.

(a) Annual Base Salary. The Executive shall receive an annual base salary during
the term of this Agreement at a rate of not less than Three Hundred Twenty Five
Thousand Dollars ($325,000), payable in installments consistent with the
Company’s normal payroll schedule. The Board or its Compensation Committee shall
review this base salary at annual intervals, and may adjust the Executive’s
annual base salary from time to time as the Board or its Compensation Committee
deems to be appropriate.

(b) Bonus. The Executive shall be eligible to receive an annual bonus during the
term of this Agreement of up to 40% of his annual base salary payable quarterly
based upon the achievement of certain calendar quarter performance targets (50%
Company based and 50% individual targets) mutually agreed upon by the Executive
and the Chief Executive Officer of the Company which could increase up to 100%
of his annual base salary at the discretion of the Board or its Compensation
Committee. The initial performance targets shall be as set forth on the attached
Schedule “A” which shall be jointly completed by the Chief Executive Officer and
the Executive as soon as practicable and subsequently prior to the 15th day of
the beginning of each calendar quarter the Chief Executive Officer and the
Executive shall jointly complete the form attached as Schedule “A”.

(c) Restricted Stock Award. The Executive shall receive an award of shares of
restricted Company common stock equal to $450,000 divided by the NASDAQ closing
price of the Company’s common stock on the date the Executive commences
employment (the “Restricted Stock”). The Restricted Stock will vest in equal
installments on April 2, 2008, April 2, 2009 and April 2, 2010 provided that
Executive is then employed by the Company as of any vesting date. The stock
certificates for the Restricted Stock will be retained by the Company and
released to Executive upon vesting on each anniversary date. If this Agreement
is terminated for death, for Disability as described in Section 5(b), for Cause
as described in Section 5(c), or a voluntary termination by the Executive as
described in Section 5(d), all then unvested shares of Restricted Stock shall be
deemed forfeited and cancelled. If this Agreement is terminated by the Company
without Cause or by Executive for Good Reason as described in Section 5(a), all
of any then unvested shares of Restricted Stock shall immediately vest in full.
In the event of a Change in Corporate Control (as defined in Section 6(b) below)
without approval of the Board of Directors during the term of this Agreement and
the termination of Executive’s employment by the acquiring entity or the Company
within six months of the Change in Corporate Control (other than a voluntary
termination by Executive or termination for Cause), then all of any unvested
shares of Restricted Stock shall immediately vest in full. In the event of a
Change in Corporate Control with the approval of the Board of Directors, then
sixty (60%) of any unvested shares of Restricted Stock shall immediately vest.
This Restricted Stock award shall be under the Company’s 2004 Stock Incentive
Plan and the Company shall maintain the effectiveness of the registration, for
resale all of the Restricted Stock granted to Executive pursuant to a Form S-8
(or any successor form) registration statement under the Securities Act. The
Restricted Stock will not be transferable by the Executive until they are
vested. Unless the Executive elects to be taxed upon receipt of the restricted
stock (by filing a special election under Section 83(b) of the Internal Revenue
Code of 1986, as amended, with the Internal Revenue Service within 30 days), the
Executive acknowledges that he will be taxed (and subject to income tax
withholding) on the value of the Restricted Stock as the shares vest. The
Executive acknowledges that he should consult with his tax advisor regarding the
federal, state and local income tax consequences of receiving the grant of
Restricted Stock hereunder. In connection with this award of Restricted Stock,
the Executive represents and warrants to the Company as follows:

(1) The Restricted Stock to be acquired by Executive pursuant to this Agreement
is acquired for Executive’s own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any applicable state
securities laws, and the Restricted Stock shall not be disposed of in
contravention of the Securities Act or any applicable state securities laws.

 

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(2) Executive is an officer of the Company, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the investment in the
Restricted Stock. Executive is an “accredited investor” as defined in Regulation
D promulgated under the Securities Act.

(3) To the extent that any of the Restricted Stock is not subject to an
effective registration statement, Executive is able to bear the economic risk of
his investment in such Restricted Stock for an indefinite period of time and
understands that such securities cannot be sold unless subsequently registered
under the Securities Act or an exemption from such registration is available.

(4) Executive has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the Restricted Stock and has had full
access to such other information concerning the Company as Executive has
requested.

(d) Vacation. The Executive shall be entitled to no less than four (4) weeks of
vacation (or such greater vacation benefits as may be provided in the future by
the Board or Compensation Committee) during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.

4. ADDITIONAL COMPENSATION AND BENEFITS. The Executive shall receive the
following additional compensation and welfare and fringe benefits:

(a) Participation in Benefit Plans. The Executive shall be eligible to
participate in the employee benefit plans, programs, practices and policies
maintained by the Company from time to time for its executives, or for its
employees generally, including without limitation any life, medical, dental,
accidental and disability insurance and profit sharing, pension, retirement,
savings, stock option, incentive stock, compensation and deferred compensation
plans, in accordance with the terms and conditions as in effect from time to
time, provided however, that Executive shall not be entitled to participate in
the Company’s 2004 performance-based bonus plan unless specifically permitted by
the Compensation Committee. The Company currently maintains a 401(k) pension
plan that Executive will be eligible to participate in on the first enrollment
date after the first year of employment.

(b) Business Expenses. The Company shall reimburse the Executive for all
reasonable expenses he incurs in promoting the Company’s business, including
expenses for travel, entertainment of business associates, lap top computer,
cellular phone, service and usage charges for business use of cellular phones
and similar items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.

(c) Moving Expenses. The Company will pay or reimburse the Executive for all
relocation expenses, including but not limited to, actual moving expenses,
temporary housing expenses, legal fees and closing costs related to the sale of
his home, and reasonable legal fees related to the review of this Agreement he
incurs as a result of his relocation in an amount not to exceed $60,000, upon
presentation by the Executive of an itemized account of such expenditures.

 

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(d) Payment of Un-reimbursed Expenses. If at the time of termination for any
reason or expiration of this Agreement the Company has not yet reimbursed the
Executive for any expenses that are subject to reimbursement under this
Agreement, the Company shall still be obligated to reimburse Executive. This
paragraph (d) shall survive termination or expiration of this Agreement.

5. PAYMENTS UPON TERMINATION

(a) Termination by the Company. If the Executive’s employment is terminated by
the Company for any reason during the term of this Agreement, the Executive
shall be entitled to receive his base salary accrued through the date of
termination, and any non-forfeitable benefits already earned and payable to him
under the terms of any deferred compensation, incentive or other benefit plan
maintained by the Company, payable in accordance with the terms of the
applicable plan.

If the termination is not for death, for Disability as described in paragraph
(b), for Cause as described in paragraph (c), or a voluntary termination by the
Executive as described in paragraph (d), the Company shall also be obligated to
make a series of monthly payments to the Executive for a period of twelve
(12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of
Executive’s annual base salary. Executive shall not be required to mitigate the
amount of any payment or benefit contemplated by this paragraph

(b) Disability. The Company shall be entitled to terminate this Agreement, if
the Board determines that the Executive has been unable to attend to his duties
for at least ninety (90) days because of a medically diagnosable physical or
mental condition, and has received a written opinion from a physician acceptable
to the Board that such condition prevents the Executive from resuming full
performance of his duties and is likely to continue for an indefinite period.
Upon such termination, the amount Executive shall be entitled to receive from
the Company shall be limited to the Executive’s base salary accrued through the
date of termination, any non-forfeitable benefits already earned and payable to
him under the terms of any deferred compensation, incentive or other benefit
plan maintained by the Company payable in accordance with the terms of the
applicable plan, and any payments as may be provided under any long-term
disability plan or other disability program or insurance policies maintained or
provided by the Company.

(c) Termination for Cause. If the Executive’s employment is terminated by the
Company for Cause, the amount the Executive shall be entitled to receive from
the Company shall be limited to his base salary accrued through the date of
termination, and any non-forfeitable benefits already earned and payable to the
Executive under the terms of deferred compensation or incentive plans maintained
by the Company.

For purposes of this Agreement, the term “Cause” shall be limited to (i) any
action by the Executive involving willful disloyalty to the Company, such as
embezzlement, fraud, misappropriation of corporate assets or a breach of the
covenants set forth in Sections 9 and 10 below; or (ii) the Executive being
convicted of a felony; or (iii) the Executive being convicted of any lesser
crime or offense committed in connection with the performance of his duties
hereunder or involving fraud, dishonesty or moral turpitude; or (iv) the
misconduct or neglect of the Executive in carrying out his duties hereunder
resulting in significant harm to the Company or (v) the failure, refusal or
inability of Executive to adequately perform his material duties hereunder
resulting in significant harm to the Company. Notwithstanding the foregoing, no
termination pursuant to subsection (iv) or (v) shall be treated as termination
for Cause unless the Board has provided executive with at least thirty (30) days
prior written notice specifying in reasonable detail the alleged breach and
giving the Executive a minimum of thirty (30) days or, in the sole discretion of
the Board, such longer period as is reasonably necessary to correct such alleged
breach in the event it is curable.

 

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(d) Voluntary Termination by the Executive. If the Executive resigns or
otherwise voluntarily terminates his employment before the end of the current
term of this Agreement, the amount the Executive shall be entitled to receive
from the Company shall be limited to his base salary accrued through the date of
termination, and any nonforfeitable benefits already earned and payable to the
Executive under the terms of any deferred compensation or incentive plans of the
Company.

(e) Termination by the Executive for Good Reason. Executive may terminate this
Agreement for Good Reason. For purposes of this Agreement “Good Reason” shall
mean any termination of this Agreement by Executive as a result of a material
reduction by the Company in Executive’s job title or his duties, or a change in
the location of his principal place of employment of more than thirty (30) miles
from Fort Myers, Florida or a material breach of this Agreement by the Company.

6. EFFECT OF CHANGE IN CORPORATE CONTROL

(a) In the event the Executive’s employment is terminated or this Agreement is
not renewed by the acquiring entity or the Company within six months of a Change
in Corporate Control that was not approved by the Board of Directors, other than
in the event of a voluntary termination by Executive, death, disability or
termination for Cause (as defined above), Executive shall be entitled to
receive, in lieu of any other severance under this Agreement, a lump sum payment
equal to 200% of his then annual base salary and prior years’ annual bonus,
provided however that if such event occurs during the first year of employment
that the lump sum payment shall be equal to 200% of his annual base salary and
his annual bonus at the 40% of annual base salary bonus level. Furthermore, in
the event of a Change in Corporate Control, Executive’s Restricted Stock award
shall vest as set forth in Section 3(c). If any payment or benefits received or
to be received by Executive pursuant to this Agreement (“Benefits”) would
(i) constitute a “parachute payment” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), or any comparable
successor provisions, and (ii) but for this subsection, would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable successor
provisions (the “Excise Tax”), then Executive shall be entitled to receive from
the Company an additional payment (a “Gross-Up Payment”) in an amount such that,
after payment by Executive of all taxes including the Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax such that Executive would be in same financial position had
the Excise Tax not applied. Unless the Company and Executive otherwise agree in
writing, any determination required under this subsection shall be made in
writing in good faith by an accountant selected by the mutual agreement of
Executive and the Company (the “Accountant”). The Company shall bear all costs
the Accountant may reasonably incur in connection with any calculations
contemplated by this subsection.

(b) For purposes of this Agreement, a “Change in Corporate Control” shall
include any of the following events which occur during the term of this
Agreement:

(1) The acquisition in one or more transactions of more than fifty percent
(50%) of the Company’s outstanding Common Stock by any corporation, LLC, person,
group or other entity;

(2) Any transfer or sale of substantially all of the assets of the Company
whether by merger, stock sale or asset sale.

 

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7. DEATH. If the Executive dies during the term of this Agreement, the Company
shall pay to the Executive’s estate a lump sum payment equal to the sum of the
Executive’s base salary accrued through the date of death plus the total unpaid
amount of any bonuses earned with respect to the fiscal year of the Company most
recently ended. In addition, the death benefits payable by reason of the
Executive’s death under any retirement, deferred compensation or other employee
benefit plan maintained by the Company shall be paid to the beneficiary
designated by the Executive in accordance with the terms of the applicable plan
or plans.

8. WITHHOLDING. The Company shall, to the extent permitted by law, have the
right to withhold and deduct from any payment hereunder any federal, state or
local taxes of any kind required by law to be withheld with respect to any such
payment.

9. PROTECTION OF CONFIDENTIAL INFORMATION. The Executive agrees that he will
keep all confidential and proprietary information of the Company or relating to
its business (including, but not limited to, information regarding the Company’s
customers, pricing policies, methods of operation, proprietary computer programs
and trade secrets) confidential, and that he will not (except with the Company’s
prior written consent), while in the employ of the Company or thereafter,
disclose any such confidential information to any person, firm, corporation,
association or other entity, other than in furtherance of his duties hereunder,
and then only to those with a “need to know,” or except as required by law. The
Executive shall not make use of any such confidential information for his own
purposes or for the benefit of any person, firm, corporation, association or
other entity (except the Company) under any circumstances during or after the
term of his employment. The foregoing shall not apply to any information which
is already in the public domain, or is generally disclosed by the Company or is
otherwise in the public domain at the time of disclosure.

The Executive recognizes that because his work for the Company will bring him
into contact with confidential and proprietary information of the Company, the
restrictions of this Section 9 are required for the reasonable protection of the
Company and its investments and for the Company’s reliance on and confidence in
the Executive.

10. COVENANT NOT TO COMPETE, NON-SOLICITATION AND NON-DISPARAGEMENT. The
Executive hereby agrees that he will not, either during the term of the
Employment Agreement or during the period of eighteen (18) months from the time
this Employment Agreement is terminated or expires for any reason, directly or
indirectly (i) engage in any business activities on behalf of any enterprise
which competes with the Company in the business of providing or managing
radiation therapy services in any state which the Company then operates in,
(ii) solicit the Company’s employees or customers or (iii) hire any of the
Company’s employees. The Executive will be deemed to be engaged in such business
activities if he participates in such a business enterprise as an employee,
officer, director, consultant, agent, partner, proprietor, or other participant;
provided that the ownership of no more than 2 percent of the stock of a publicly
traded corporation shall not be deemed to be engaging in business activities.
Executive further agrees that during the term of this Agreement and at all times
thereafter, that Executive will not make, publish or disseminate any statement
(written or otherwise), or engage in any conduct that is derogatory or
disparaging to the Company or any of its officers, directors, employees or
affiliated professionals or otherwise take any action which would reasonably be
expected to impair the business reputation or good name of any of them.

11. INJUNCTIVE RELIEF. The Executive acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of the covenants set forth in Sections 9 and 10 of this
Agreement and accordingly agrees that the Company shall be entitled to temporary
and injunctive relief, including temporary

 

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restraining orders, preliminary injunctions and permanent injunctions, to
enforce such provisions in any action or proceeding instituted in the United
States District Court for the Western District of Florida or in any court in the
State of Florida having subject matter jurisdiction. This provision with respect
to injunctive relief shall not, however, diminish the Company’s right to claim
and recover damages.

It is expressly understood and agreed that although the parties consider the
restrictions contained in this Agreement to be reasonable, if a court determines
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction on the activities of the Executive, no such
provision of this Agreement shall be rendered void but shall be deemed amended
to apply as to such maximum time and territory and to such extent as such court
may judicially determine or indicate to be reasonable.

The Executive acknowledges and confirms that (a) the restrictive covenants
contained in Sections 9 and 10 hereof are reasonably necessary to protect the
legitimate business interests of the Company, and (b) the restrictions contained
in Sections 9 and 10 hereof (including without limitation the length of the term
of the provisions of Sections 9 and 10 hereof) are not overbroad, overlong, or
unfair and are not the result of overreaching, duress or coercion of any kind.
The Executive further acknowledges and confirms that his full, uninhabited and
faithful observance of each of the covenants contained in Sections 9 and 10
hereof will not cause him any undue hardship, financial or otherwise, and that
enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. The Executive acknowledges and confirms that his special knowledge of
the business of the Company is such as would cause the Company serious injury or
loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of Sections 9 and
10 hereof. The Executive further acknowledges that the restrictions contained in
Sections 9 and 10 hereof are intended to be, and shall be, for the benefit of
and shall be enforceable by, the Company’s successors and assigns.

If the Executive shall be in violation of any provision of Sections 9 and 10,
then each time limitation set forth in the applicable section shall be extended
for a period of time equal to the period of time during which such violation or
violations occur. If the Company seeks injunctive relief from such violation in
any court, then the covenants set forth in Sections 9 and 10 shall be extended
for a period of time equal to the pendency of such proceeding including all
appeals by the Executive.

Sections 9, 10 and 11 of this Agreement shall survive the termination or
expiration of this Agreement.

12. SECTION 409A OF THE INTERNAL REVENUE CODE. Notwithstanding any provision in
this Agreement to the contrary, in the event one or more of the payments
received or to be received by the Executive pursuant to this Agreement would
constitute nonqualified deferred compensation subject to Section 409A of the
Internal Revenue Code that is subject to the imposition of any penalty tax or
excise tax, no such payment or benefit will be provided to Executive under
this Agreement until the earliest date on which payment would avoid the
imposition of any penalty tax or excise tax under Section 409A. The provisions
of this section shall only apply to the extent required to avoid the incurrence
of any penalty tax or excise tax under Section 409A of the Internal Revenue Code
or any regulations or Treasury guidance promulgated thereunder.

13. SEPARABILITY. If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.

 

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14. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
the heirs and representatives of the Executive and the assigns and successors of
the Company, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive. The Company
may assign this Agreement without the consent of the Executive to a successor
entity which shall include any entity that at any time acquires all or
substantially all of the assets or ownership interests in the Company whether by
purchase, merger or otherwise.

15. ENTIRE AGREEMENT. This Agreement represents the entire agreement of the
parties and shall supersede any other previous contracts, arrangements or
understandings between the Company and the Executive related to employment. The
Agreement may be amended at any time by mutual written agreement of the parties
hereto.

16. GOVERNING LAW AND ATTORNEYS FEES. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of Florida,
other than the conflict of laws provisions of such laws. In the event of any
legal proceeding relating to this Agreement, the prevailing party in such
proceeding shall be entitled to an award of its reasonable costs and expenses
incurred in such proceeding, including reasonable attorneys fees, from the
non-prevailing party.

17. HEADINGS. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.

18. WAIVER. The failure of either party to insist upon strict adherence to any
obligation of this Agreement shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.

19. COUNTERPARTS. This Agreement may be executed in two (2) counterparts and by
facsimile, each of which shall be considered an original.

[Remainder of this page is left blank and the signature page follows this page]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed,
and the Executive has hereunto set his hand, as of the day and year first above
written.

 

RADIATION THERAPY SERVICES, INC. By:  

/s/ Daniel E. Dosoretz, M.D.

Name:   Daniel E. Dosoretz, M.D. Title:   President and Chief Executive Officer
EXECUTIVE:

/s/ David N.T. Watson

David N.T. Watson

 

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Schedule “A”

(Performance Objectives pursuant to Section 3(b))

Company Performance Target Portion

Employee Performance Target Portion

The above is for the          quarter of             .

 

  

Chief Executive Officer

  

Executive

 

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