exv10w1



 




Exhibit
10.1



 





EMPLOYMENT AGREEMENT




by and between




ODYSSEY HEALTHCARE, INC.




and




R. DIRK ALLISON




dated effective as of




October 30, 2006




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	1.	 	Certain Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	Term of Employment; Non-Renewal of Term	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	3.	 	Terms of Employment	 	 	5	 
	 
	 	(a)	 	Position and Duties	 	 	5	 
	 
	 	(b)	 	Compensation	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	4.	 	Termination of Employment	 	 	7	 
	 
	 	(a)	 	Death	 	 	7	 
	 
	 	(b)	 	Disability	 	 	7	 
	 
	 	(c)	 	Cause	 	 	8	 
	 
	 	(d)	 	Resignation by Employee	 	 	8	 
	 
	 	(e)	 	Agreement Not to Terminate	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	5.	 	Compensation Upon Termination Prior to a Change in Control
of the Company and After the Second Anniversary of such
Change in Control	 	 	8	 
	 
	 	(a)	 	Death or Disability	 	 	8	 
	 
	 	(b)	 	For Cause; Resignation by Employee
Without Good Reason; Non-Renewal Election by Employee	 	 	9	 
	 
	 	(c)	 	Without Cause; Resignation by
Employee for Good Reason; Non-Renewal Election by the Company	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	6.	 	Compensation Upon Employment Termination Occurring On or Within
Two Years After a Change in Control of the Company	 	 	11	 
	 
	 	(a)	 	Compensation Upon Termination	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	7.	 	Other Provisions Relating to Termination	 	 	13	 
	 
	 	(a)	 	Notice of Termination	 	 	13	 
	 
	 	(b)	 	Date of Termination	 	 	13	 
	 
	 	(c)	 	Good Reason	 	 	13	 
	 
	 	(d)	 	Cause	 	 	14	 
	 
	 	(e)	 	Full Settlement; Mitigation	 	 	14	 
	 
	 	(f)	 	Release and Other Agreements	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	8.	 	Disclosure of, Access to and Entrustment of Confidential Information, Business
Opportunities and Business Goodwill	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	9.	 	Confidential Information; Ownership of Property	 	 	15	 
	 
	 	(a)	 	Obligations to Maintain Confidentiality	 	 	15	 
	 
	 	(b)	 	Ownership of Work Product	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	10.	 	Non-Competition; Non-Solicitation; Non-Disparagement	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	11.	 	Successors; Binding Agreement	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	12.	 	Effect of Agreement on Plans and Agreements Governing Awards	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	13.	 	Miscellaneous	 	 	20	 
	 
	 	(a)	 	Construction	 	 	20	 






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	 	 	 	 	 	 	Page	 
	 
	 	(b)	 	Notices	 	 	20	 
	 
	 	(c)	 	Severability	 	 	20	 
	 
	 	(d)	 	Withholding	 	 	21	 
	 
	 	(e)	 	No Waiver	 	 	21	 
	 
	 	(f)	 	Equitable and Other Relief	 	 	21	 
	 
	 	(g)	 	Entire Agreement	 	 	21	 
	 
	 	(h)	 	Arbitration	 	 	21	 
	 
	 	(i)	 	Attorney Fees	 	 	22	 
	 
	 	(j)	 	Survival	 	 	22	 
	 
	 	(k)	 	Governing Law	 	 	22	 
	 
	 	(l)	 	Amendments	 	 	22	 
	 
	 	(m)	 	Employee Acknowledgement	 	 	22	 
	 
	 	(n)	 	Counterparts	 	 	23	 







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EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of
October 30, 2006 (the “Effective Date”), by and between Odyssey HealthCare, Inc., a
Delaware corporation (the “Company”), and R. Dirk Allison (“Employee”).



RECITALS:




     A. The Company is a national provider of hospice services and desires to employ Employee as
the Senior Vice President and Chief Financial Officer of the Company.



     B. The Company considers the establishment and maintenance of a sound and vital management
group to be essential to protecting and enhancing its best interests and the best interests of its
stockholders.



     C. In order to induce Employee to accept employment by the Company as an officer of the
Company and its Subsidiaries (as defined in Section 1(o) below), the Company is willing to
agree to provide certain severance benefits to Employee in the event that Employee’s employment is
terminated or changed under the circumstances described in this Agreement.



     D. Employee is desirous of committing himself to serve the Company and its Subsidiaries on the
terms herein provided.



AGREEMENTS:




     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:



     1. Certain Definitions. As used in this Agreement, the following terms have the meanings
set forth below:



          (a) “Acquiring Person” means any Person or group of related Persons (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than (i) Employee or any
Employee Affiliate, or (ii) the Company, any of the Company’s Subsidiaries, any employee benefit
plan of the Company or of a Subsidiary of the Company or of a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Subsidiary of the Company or of a corporation owned
directly or indirectly by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.




          (b) “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with the Person in question. As
used in this definition of “Affiliate,” the term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of Voting Securities, by contract, or otherwise.




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          (c) “Board” means the Board of Directors of the Company and any committee thereof.




          (d) “Cause” means Employee’s




               (i) continued failure to substantially perform Employee’s material obligations and duties
under Section 3(a) (other than as a result of physical or mental incapacity), as reasonably
determined by the Board, and which is not remedied within 30 days after receipt of written notice
from the Company specifically identifying the manner in which the Company believes that Employee
has not substantially performed Employee’s material obligations and duties under Section
3(a);



               (ii) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, bad
faith, dishonesty, breach of trust, or breach of fiduciary duty against the Company;



               (iii) material breach of Sections 8, 9 or 10;



               (iv) conviction, plea of no contest or nolo contendere, deferred adjudication or unadjudicated
probation for any felony or any crime involving moral turpitude;



               (v) failure to carry out, or comply with, in any material respect, any lawful directive of the
Board or the Reporting Officer (as defined in Section 3(a)) consistent with the terms of this
Agreement, which is not remedied within 30 days after receipt of written notice from the Company
specifying such failure;



               (vi) violation of the Company’s substance abuse policy; or



               (vii) suspension or termination of Employee from participation in the Medicare or Medicaid
programs.



          (e) “Change in Control” means the occurrence of any of the following events:




               (i) any of the events described in clauses (ii), (iii) and (iv) of the definition of
“Change in Control” in the Odyssey HealthCare, Inc. 2001 Equity-Based Compensation Plan as in
effect on the date of this Agreement; or



               (ii) any Acquiring Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent
or more of the combined voting power of the then outstanding Voting Securities of the Company.



          (f) “Competing Business” means a business that competes in any material respect with
the business engaged in by the Company or any of its Subsidiaries, (A) at the time in question in
respect of the Term of Non-Competition (as defined in Section 1(p)) occurring
prior to the Date of Termination and (B) as of the Date of Termination (as defined in
Section 7(b)) in respect of the Term of Non-Competition occurring on and after the Date of
Termination.




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          (g) “Competing Services” means services that, if provided to a business other than a
Competing Business, would constitute the conduct of a Competing Business.




          (h) “Disability” means Employee’s inability to perform, with or without reasonable
accommodations, the essential functions of Employee’s position hereunder for a period of 180
consecutive days due to mental or physical incapacity, as determined by mutual agreement of a
physician selected by the Company or its insurers and a physician selected by Employee; provided,
however, that if the opinion of the Company’s physician and Employee’s physician conflict, the
Company’s physician and Employee’s physician shall together agree upon a third physician, whose
opinion shall be binding. The foregoing definition of “Disability” is not intended to and shall
not affect the definition of “disability” or any similar term in any insurance policy the Company
or any of its Subsidiaries may provide.




          (i) “Employee Affiliate” means any Person directly or indirectly controlled by
Employee. For purposes of this Agreement, a Person shall be presumed to be controlled by Employee
if (i) Employee is a general partner of such Person (including any partnership in which Employee is
a general partner or any trust in which Employee is a trustee or beneficiary), (ii) Employee
directly or indirectly beneficially owns 10% or more of the outstanding Voting Securities of such
Person or (iii) such Person is controlled by any Person contemplated in clauses (i) or (ii) of this
definition.




          (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.




          (k) “Geographic Area” means each city (including the 50-mile radius surrounding such
city) in which the Company or any of its Subsidiaries has a facility that engages in its respective
business or any line of its business (A) at the time in question in respect of the Term of
Non-Competition occurring prior to the Date of Termination and (B) as of the Date of Termination in
respect of the Term of Non-Competition occurring on and after the Date of Termination.




          (l) “Good Reason” means, subject to the terms and provisions of this Agreement
(including Sections 1(d) and 4(b)), the occurrence of one or more of the following
events:




               (i) any removal of Employee from the offices of Senior Vice President and Chief Financial
Officer of the Company; provided, however, that Good Reason may not be asserted by Employee under
this clause (i) after a Non-Renewal Notice has been given by either the Company or Employee;



               (ii) any termination or material reduction of a material benefit under any Investment Plan or
Welfare Plan in which Employee participates unless (A) there is substituted a comparable benefit
that is economically substantially equivalent to the terminated or reduced benefit prior to such
termination or reduction or (B) benefits under such Investment
Plan or Welfare Plan are terminated or reduced with respect to all employees previously
granted benefits thereunder;



               (iii) any reduction in Employee’s Annual Base Salary;



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               (iv) any failure by the Company to comply with any of the provisions of Section
3(b), which failure is not contemplated previously within this definition;



               (v) any failure by the Company to comply with Section 11(c);



               (vi) the relocation or transfer of Employee’s principal office to a location more than 50
miles from Employee’s work address as of the Effective Date in the city of Dallas, Texas, without
Employee’s consent;



               (vii) a change in Employee’s reporting relationship described in Section 3(a) which results in
Employee reporting to an officer of the Company other than the Chief Executive Officer of the
Company; or



               (viii) without limiting the generality of the foregoing, any material breach by the Company or
any of its Subsidiaries or other Affiliates of (A) this Agreement or (B) any other agreement
between Employee and the Company or any such Subsidiary or other Affiliate,


excluding, in the case of clauses (i) through (viii), any isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by Employee.




          (m) “Person” means any individual, partnership, limited liability partnership, joint
venture, corporation, limited liability company, trust, association, or other entity or
organization.




          (n) “Pro Rata Bonus” means the amount equal to the product of (i) the amount of the
Annual Bonus (as defined in Section 3(b)(ii)), if any, to which Employee would have been
entitled for the calendar year in which Employee’s Date of Termination occurs if Employee’s
employment were not terminated during such calendar year, multiplied by (ii) a fraction,
the numerator of which is the number of days that have elapsed since the beginning of such calendar
year through (but not including) Employee’s Date of Termination, and the denominator of which is
the total number of days in such calendar year. The amount, if any, of the Annual Bonus to which
Employee would have been entitled for the calendar year in which the Date of Termination occurs
shall be determined by the Board in its sole good faith discretion; provided, however, that during
the period on or within two years after a Change in Control, for purposes of determining the amount
of the Pro Rata Bonus, Employee shall be deemed to have been entitled to an Annual Bonus of not
less than the amount of the last Annual Bonus awarded to Employee prior to such Change in Control,
and provided further however that any determination by the Board as to satisfaction of a
performance standard shall be made in the same manner as such determination is made for the other
executive officers of the Company.




          (o) “Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.




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          (p) “Term of Non-Competition” means the period of time beginning on the Effective Date
and continuing until 5:00 p.m., Dallas, Texas time, on the first anniversary of the Date of
Termination.




          (q) “Voting Securities” means any securities that vote generally in the election of
directors, in the admission of general partners, or in the selection of any other similar governing
body.




          (r) “without Cause” means a termination by the Company of Employee’s employment during
the Term at the Company’s sole discretion for any reason other than a termination based upon Cause,
death or Disability; provided that, “without Cause” does not include termination of this Agreement
and Employee’s employment pursuant to Section 2.




     2. Term of Employment; Non-Renewal of Term. Subject to the terms and provisions of this
Agreement, the Company hereby agrees to employ Employee, and Employee hereby agrees to be employed
by the Company, for the period (the “Term”) commencing on the Effective Date and, unless
Employee’s employment hereunder is sooner terminated in accordance with the terms hereof, expiring
at 5:00 p.m., Dallas Texas time, on October 29, 2009; provided, however, that commencing on October
29, 2009 (the Employment Expiration Date”), and on each October 29th occurring thereafter,
the Term shall automatically (without any action by either party) be extended for one additional
year unless, at least 90 days prior to the expiration of the Term, the Company or Employee shall
have given written notice (a “Non-Renewal Notice”) that it or Employee, as applicable, does
not wish to extend this Agreement (a “Non-Renewal”). Either party may elect not to renew
this Agreement. The term “Term,” as utilized in this Agreement, shall refer to the Term as so
automatically extended. The Term shall expire as a result of any Non-Renewal at 5:00 p.m., Dallas,
Texas time, on the October 29th of the extension period during which a Non-Renewal Notice is given,
and Employee’s employment shall terminate at the expiration of the Term.



     3. Terms of Employment.



          (a) Position and Duties.




               (i) During the Term, Employee shall serve as Senior Vice President and Chief Financial Officer
of the Company. In so doing, Employee shall have such powers and duties (including holding officer
positions with one or more Subsidiaries of the Company) as may be assigned from time to time by the
Board, so long as such powers and duties are reasonable and customary for Senior Vice Presidents
and Chief Financial Officers of an
enterprise comparable to the Company. Employee shall report to the Chief Executive Officer of
the Company (the “Reporting Officer”).



               (ii) During the Term, and excluding any periods of vacation and sick leave to which Employee
is entitled, Employee agrees to devote all of Employee’s business time to the business and affairs
of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee
hereunder, to (a) use Employee’s best efforts to perform diligently, faithfully, effectively and
efficiently such responsibilities, (b) use Employee’s best efforts to promote the interests of the
Company; (c) use Employee’s reasonable best efforts to



5









 







maintain Employer’s status as a
participating provider under the Medicare and Medicaid programs; and (d) perform such other duties
appropriate for Employee’s position as the Board or the Reporting Officer may from time to time
reasonably direct.



               (iii) Employee shall not engage, directly or indirectly, in any other business, investment, or
activity that interferes with the performance of Employee’s duties under this Agreement, is
contrary to the interests of the Company or requires any portion of Employee’s business time;
provided, however, that during the Term, it shall not be a violation of this Agreement for Employee
to (1) serve on the board of directors (or similar governing body) of one or more other companies
that do not engage in a Competing Business if the Board has provided prior approval (which shall
not be unreasonably withheld) for such service, (2) serve on corporate, civic, charitable or
industry sector association boards or committees, (3) deliver lectures or fulfill speaking
engagements and (4) manage personal investments, so long as such activities do not materially
interfere with the performance of Employee’s responsibilities as an employee of the Company in
accordance with this Agreement.



          (b) Compensation.




               (i) Annual Base Salary. During the Term, Employee shall receive an annual base salary
(“Annual Base Salary”), which shall be paid bi-weekly in accordance with the customary
payroll practices for executive officers of the Company, in an amount at least equal to $310,000.00
per year. At least annually (by no later than January 31 of each year) during the Term, the Board
shall review the Annual Base Salary of Employee and may increase (but not decrease) the Annual Base
Salary by such amount as the Board shall deem appropriate. The term “Annual Base Salary”
as used in this Agreement shall refer to the Annual Base Salary as it may be so increased.



               (ii) Annual Bonus. During the Term, Employee shall be eligible to receive, in
addition to the Annual Base Salary, such annual bonus payments as the Board may specify in its sole
discretion (each, an “Annual Bonus”). Annually (by no later than March 15 of each calendar
year during the Term), the Board shall determine the amount (or amount range) of the Annual Bonus
that Employee shall be eligible to receive for the calendar year and the performance goals that
must be achieved for Employee to become entitled to receive the Annual Bonus for such calendar
year. For each calendar year (or partial calendar year) during the Term, the Board shall determine
in its sole good faith discretion whether the performance goals established for Employee for such
calendar year have been achieved, such determination to be
made by no later than the date on which the Company publicly announces its earnings for such
calendar year in a press release in the immediately following calendar year. Subject to the terms
hereof, any Annual Bonus that Employee becomes entitled to receive shall be payable to Employee
within fifteen days after such determination by the Board.



               (iii) Incentive, Savings, Stock Option and Retirement Plans. During the Term,
Employee shall be entitled to participate in all incentive, savings, stock option, equity-based,
profit sharing and retirement plans, practices, policies and programs applicable generally to other
executive officers of the Company (“Investment Plans”), subject to all of the terms and
conditions of such Investment Plans.



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               (iv) Welfare Benefit Plans. During the Term, Employee and/or Employee’s family, as
the case may be, shall be eligible for participation in and shall receive all benefits under the
welfare benefit plans, practices, policies and programs (“Welfare Plans”) provided by the
Company (including, without limitation, medical, prescription, dental, short-term and long-term
disability, salary continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other executives of the
Company, subject to all of the terms and conditions of such Welfare Plans.



               (v) Perquisites. During the Term, Employee shall be entitled to receive (in addition
to the benefits described above) such perquisites and fringe benefits appertaining to Employee’s
position in accordance with any policies, practices, and procedures established by the Board. In
addition to the forgoing, Employee shall be entitled to receive a health club dues allowance of not
more than $100.00 per month, as determined by the Board.



               (vi) Expenses. During the Term, Employee shall be entitled to receive prompt
reimbursement for all reasonable business-related expenses incurred by Employee in the performance
of Employee’s duties in accordance with the Company’s policies, practices and procedures.



               (vii) Vacation and Holidays. During the Term, Employee shall be entitled to paid
vacation, in accordance with the plans, policies, programs and practices of the Company for its
executive officers. In addition, Employee shall be entitled to sick leave and paid holidays, in
accordance with the plans, policies, programs and practices of the Company for its executive
officers.



               (viii) Proration. Any payments or benefits payable to Employee hereunder in respect
of any calendar year during which Employee is employed by the Company for less than the entire
year, unless otherwise provided in the applicable plan or arrangement, shall be prorated in
accordance with the number of days in such calendar year during which Employee is so employed.



     4. Termination of Employment.



          (a) Death. Employee’s employment hereunder shall terminate automatically upon Employee’s death during the
Term.




          (b) Disability. If the Disability of Employee has occurred during the Term, the Company
may give to Employee a written Notice of Termination (as defined in Section 7(a)) in
accordance with Section 7(a) of its intention to terminate Employee’s employment hereunder.
In such event, Employee’s employment shall terminate effective on the 30th day after receipt of
such notice by Employee (the “Disability Effective Date”); provided that, within 30 days
after receipt of the Notice of Termination, Employee shall not have returned to perform, with or
without reasonable accommodations, the essential functions of Employee’s position on a full-time
basis. During any period of Employee’s Disability, the Company may assign Employee’s duties to any
other Employee of the Company or may engage or hire a third party to perform such duties and any
such action shall not be deemed “Good Reason” for Employee to terminate


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this Agreement pursuant to
Section 4(d)(i) so long as Employee continues to receive the compensation and benefits
under Section 3 during such period.




          (c) Cause. Subject to Section 7(d), the Company may terminate Employee’s
employment at any time during the Term for Cause or without Cause.




          (d) Resignation by Employee. At Employee’s option, Employee may terminate Employee’s
employment hereunder (i) subject to Section 7(c), for Good Reason or (ii) without Good
Reason.




          (e) Agreement Not to Terminate. Notwithstanding any provision to the contrary contained in
this Agreement, the Company agrees that it shall not have the right to terminate Employee’s
employment, other than for Cause, for a period of time commencing on the Effective Date and ending
at 5:00 p.m., Dallas, Texas time, on the 180th day following the Effective Date.




     5. Compensation Upon Termination Prior to a Change in Control of the Company and After the
Second Anniversary of such Change in Control. Prior to the occurrence of a Change in Control
of the Company and after the second anniversary of such Change in Control of the Company,
conditioned on the execution and delivery of a Release (as defined in Section 7(f)) signed
by Employee or Employee’s legal representative pursuant to Section 7(f), Employee shall be
entitled to the following compensation from the Company upon the termination of Employee’s
employment during the Term, which shall be in lieu of any other severance pay or employment
benefits to which Employee might otherwise be entitled (whether contractual or under a severance
plan, the WARN Act, any other applicable law, or otherwise):



          (a) Death or Disability. If Employee’s employment is terminated by reason of Employee’s death or Disability, the Company
shall pay to Employee or Employee’s legal representatives (i) within 30 days after the later to
occur of the Date of Termination or the effective date of the Release, a lump sum in cash equal to
the sum of Employee’s Annual Base Salary through the Date of Termination to the extent not
previously paid and any compensation previously deferred by Employee (together with any accrued
interest or earnings thereon) (the “Accrued Obligations”); (ii) the amount of any Annual
Bonus to which Employee was entitled for the calendar year ending prior to the Date of Termination
to the extent not previously paid, which amount shall be paid at such time as the Company pays
other executives of the Company annual bonuses for the prior calendar year (but in no event later
than the fifteenth business day after the Company publicly announces its earnings for such calendar
year in a press release); (iii) without duplication of any amount payable pursuant to clause (ii)
above, the amount of any Pro Rata Bonus, which shall be paid at such time as the Company pays the
other executives of the Company annual bonuses for the calendar year in which Employee’s Date of
Termination occurs (but in no event later than the fifteenth business day after the Company
publicly announces its earnings for such calendar year in a press release); (iv) any amounts
arising from Employee’s participation in, or benefits under, any Investment Plan (the “Accrued
Investments”), which amounts shall be paid in accordance with the terms and conditions of such
Investment Plan; and (v) any amounts to which Employee or Employee’s spouse, beneficiaries or
estate are entitled from Employee’s participation in, or benefits under, any Welfare Plan
(“Accrued Welfare Benefits”), which amounts shall be paid in accordance with the terms and
conditions of such




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Welfare Plan. Except as described in this Section 5(a), in the event of
Employee’s termination by reason of Employee’s death or Disability, Employee and Employee’s legal
representatives, as applicable, shall forfeit all rights to any other compensation.




          (b) For Cause; Resignation by Employee Without Good Reason; Non-Renewal Election by
Employee. If the Company shall terminate Employee’s employment for Cause or Employee resigns
without Good Reason or Employee’s employment is terminated due to a Non-Renewal election by
Employee, the Company shall have no further obligations to Employee other than the obligation for
payment of:




               (i) the Accrued Obligations, which shall be payable within 30 days after the later to occur of
the Date of Termination or the effective date of the Release;



               (ii) the amount of any Annual Bonus to which Employee was entitled for the calendar year
ending prior to the Date of Termination to the extent not previously paid, which amount shall be
payable at such time as the Company pays other executive of the Company annual bonuses for the
prior calendar year (but in no event later than the fifteenth business day after the Company
publicly announces its earnings for such calendar year in a press release);



               (iii) the Accrued Investments, which amounts shall be paid in accordance with the terms and
conditions of the Investment Plans;



               (iv) the Accrued Welfare Benefits, which amounts shall be paid in accordance with the terms
and conditions of the Welfare Plans; and



               (v) without duplication of any amount payable pursuant to clause (ii) above, solely in the
case of a Non-Renewal by Employee, the amount of any Pro Rata Bonus, which shall be paid at such
time as the Company pays the other executives of the Company annual bonuses for the calendar year
in which Employee’s Date of Termination occurs (but in no event later than the fifteenth business
day after the Company publicly announces its earnings for such calendar year in a press release).



     Except as described in this Section 5(b), in the event of Employee’s termination by
the Company for Cause or by Employee without Good Reason or due to a Non-Renewal election by
Employee, Employee shall forfeit all rights to any other compensation.



          (c) Without Cause; Resignation by Employee for Good Reason; Non-Renewal Election by the
Company. If the Company shall terminate Employee’s employment without Cause (other than by
reason of Employee’s death or Disability or a Non-Renewal) or Employee resigns for Good Reason or
Employee’s employment is terminated due to a Non-Renewal election by the Company, then the Company
shall pay or provide Employee:




               (i) within 30 days after the later to occur of the Date of Termination or the effective date
of the Release, a lump sum in cash equal to the aggregate of the following amounts: (A) the Accrued
Obligations and (B) the amount of any Annual Bonus to which Employee was entitled for the calendar
year ending prior to the Date of Termination to the extent not previously paid;



9









 





               (ii) without duplication of any amount payable pursuant to clause (i)(B) above, the amount of
any Pro Rata Bonus, which shall be paid at such time as the Company pays the other executives of
the Company annual bonuses for the calendar year in which Employee’s Date of Termination occurs
(but in no event later than the fifteenth business day after the Company publicly announces its
earnings for such calendar year in a press release);



               (iii) the Accrued Investments, which amounts shall be paid in accordance with the terms and
conditions of the Investment Plans;



               (iv) the Accrued Welfare Benefits, which amounts shall be paid in accordance with the terms
and conditions of the Welfare Plans;



               (v) the amount of Employee’s Annual Base Salary as of the Date of Termination, which amount
shall be paid in bi-weekly payments, in accordance with the customary payroll practices of the
Company, for the period from the Date of Termination through the first anniversary of the Date of
Termination (such period, the “Severance Period”) in accordance with the customary payroll
practices for executive officers of the Company; provided, however, that Employee shall be entitled
to receive the amount payable pursuant to this Section 5(c)(v) only so long as Employee has
not breached the provisions of Section 8, 9 or
10, at which time the Company’s payment obligations pursuant to this Section
5(c)(v) shall immediately cease;



               (vi) if Employee is entitled on the Date of Termination to coverage under the medical,
prescription, and dental portions of the Welfare Plans, continuation of such coverage for Employee
and Employee’s dependents for a period ending on the later to occur of (A) the first anniversary of
the Date of Termination or (B) the Employment Expiration Date, at the active employee cost payable
by Employee with respect to those costs paid by Employee prior to the Date of Termination and
whereby the balance of applicable premiums, as determined by the Company, shall be paid by the
Company, with income applicable to such premiums imputed to Employee; provided, however, that this
coverage will count towards the depletion of any continued health care coverage rights that
Employee and Employee’s dependents may have pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”); provided, further, however, that
Employee’s or Employee’s dependents’ rights to continued health care coverage pursuant to this
Section 5(c)(vi) shall terminate at the time Employee or Employee’s dependents become
covered, as described in COBRA, under another group health plan, and shall also terminate as of the
date the Company ceases to provide coverage to its senior executives generally under any such
Welfare Plan; and



               (vii) notwithstanding the terms or conditions of any Award (as defined in the Odyssey
HealthCare, Inc. 2001 Equity-Based Compensation Plan), Employee shall be entitled to exercise
Employee’s Awards that are vested as of the Date of Termination until the first anniversary of the
Date of Termination provided, however, that if the terms of the plan or agreement governing such
Award (other than the meaning of “Cause” and “Disability”) are more favorable to Employee as to
exercisability than the terms of this Section 5(c)(vii), then the more favorable term(s) of
such Award agreement or plan shall govern the exercisability of such Award upon Employee’s
termination.



10









 





     Except as described in this Section 5(c), in the event of Employee’s termination by
the Company without Cause or by Employee for Good Reason or due to a Non-Renewal election by the
Company, Employee shall forfeit all rights to any other compensation.



     6. Compensation Upon Employment Termination Occurring On or Within Two Years After a Change in
Control of the Company.



          (a) Compensation Upon Termination. After the occurrence of a Change in Control of the
Company and on or before the second anniversary of such Change in Control, conditioned on the
execution and delivery of a Release signed by Employee or Employee’s legal representative pursuant
to Section 7(f), Employee shall be entitled to the following compensation from the Company
upon the termination of Employee’s employment during the Term, which shall be in lieu of any other
severance pay or employment benefits to which Employee might otherwise be entitled (whether
contractual or under a severance plan, the WARN Act, any other applicable law, or otherwise):




               (i) Death or Disability. If Employee’s employment is terminated by reason of
Employee’s death or Disability, then Employee or Employee’s legal representatives shall be entitled
to the same compensation benefits from the Company as set forth in Section 5(a) to which
Employee would have been entitled if the termination of Employee’s employment had occurred prior to
the occurrence of a Change in Control or after the second anniversary of such Change in Control.
Except as described in this Section 6(a)(i), Employee’s death or Disability, Employee and
Employee’s legal representatives, as applicable, shall forfeit all rights to any other
compensation.



               (ii) For Cause; Resignation by Employee Without Good Reason; Non-Renewal Election by
Employee. If the Company shall terminate Employee’s employment for Cause or Employee resigns
without Good Reason or Employee’s employment is terminated due to a Non-Renewal election by
Employee, then Employee or Employee’s legal representatives shall be entitled to the same
compensation benefits from the Company as set forth in Section 5(b) to which Employee would
have been entitled if the termination of Employee’s employment had occurred prior to the occurrence
of a Change in Control or after the second anniversary of such Change in Control. Except as
described in this Section 6(a)(ii), in the event of Employee’s termination by the Company
for Cause or by Employee without Good Reason or due to a Non-Renewal election by Employee, Employee
shall forfeit all rights to any other compensation.



               (iii) Without Cause; Resignation by Employee for Good Reason; Non-Renewal Election by the
Company. If the Company shall terminate Employee’s employment without Cause (other than by
reason of Employee’s death or Disability) or Employee resigns for Good Reason or Employee’s
employment is terminated due to a Non-Renewal election by the Company, then the Company shall pay
or provide Employee:




               (A) within 30 days after the later to occur of the Date of Termination or the effective
date of the Release, a lump sum in cash equal to the aggregate of the following amounts: (1)
the Accrued Obligations and (2) the amount of any Annual Bonus to which Employee was
entitled for the calendar year ending prior to the Date of Termination to the extent not
previously paid;



11









 






               (B) the amount of any Pro Rata Bonus, which shall be paid at such time as the Company
pays the other executives of the Company annual bonuses for the calendar year in which
Employee’s Date of Termination occurs (but in no event later than the fifteenth business day
after the Company publicly announces its earnings for such calendar year in a press
release);




               (C) the Accrued Investments, which amounts shall be paid in accordance with the terms
and conditions of the Investment Plans;




               (D) the Accrued Welfare Benefits, which amounts shall be paid in accordance with the
terms and conditions of the Welfare Plans;




               (E) bi-weekly payments each of which are equal to 1/26th of the highest Annual Base
Salary to which Employee was entitled during the 24-month period ending on the Date of
Termination, payable in accordance with the customary
payroll practices of the Company, which payments shall continue from the Date of
Termination through the later to occur of (1) the first anniversary of the Date of
Termination or (2) the second anniversary of the date on which the Change of Control was
consummated (such period, the “Change of Control Severance Period”); provided, however, that
Employee shall be entitled to receive the amount payable pursuant to this Section
6(a)(iii)(E) only so long as Employee has not breached the provisions of Section
8, 9 or 10, at which time the Company’s payment obligations pursuant to
this Section 6(a)(iii)(E) shall immediately cease; and




               (F) if Employee is entitled on the Date of Termination to coverage under the medical,
prescription, and dental portions of the Welfare Plans, continuation of such coverage for
Employee and Employee’s dependents for a period ending on the later to occur of (1) the
first anniversary of the Date of Termination or (2) the Employment Expiration Date, at the
active employee cost payable by Employee with respect to those costs paid by Employee prior
to the Date of Termination and whereby the balance of applicable premiums, as determined by
the Company, shall be paid by the Company, with income applicable to such premiums imputed
to Employee; provided, however, that this coverage will count towards the depletion of any
continued health care coverage rights that Employee and Employee’s dependents may have
pursuant to COBRA; provided further, however, that Employee’s or Employee’s dependents’
rights to continued health care coverage pursuant to this Section 6(a)(iii)(F) shall
terminate at the time Employee or Employee’s dependents become covered, as described in
COBRA, under another group health plan, and shall also terminate as of the date the Company
ceases to provide coverage to its senior executives generally under any such Welfare Plan;
and




               (G) notwithstanding the terms or conditions of any Award (as defined in the Odyssey
HealthCare, Inc. 2001 Equity-Based Compensation Plan), Employee shall be entitled to
exercise Employee’s Awards that are vested as of the Date of Termination until the first
anniversary of the Date of Termination provided, however, that if the terms of the plan or
agreement governing such Award (other than the meaning of “Cause” and “Disability”) are more
favorable to Employee as to exercisability than the



12









 







terms of this Section
6(a)(iii)(G), then the more favorable term(s) of such Award agreement or plan shall
govern the exercisability of such Award upon Employee’s termination.



     Except as described in this Section 6(a)(iii), in the event of Employee’s termination
by the Company without Cause or by Employee for Good Reason or due to a Non-Renewal election by the
Company, Employee shall forfeit all rights to any other compensation.



     7. Other Provisions Relating to Termination.



          (a) Notice of Termination. Any termination by the Company for Cause or without Cause or by reason of Employee’s
Disability, or by Employee’s resignation for Good Reason or without Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in accordance with
Section 13(b). For purposes of this Agreement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this Agreement relied upon
and (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee’s employment under the provision so
indicated. The failure by the Company or Employee to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any
right of the Company or Employee hereunder or preclude the Company or Employee from asserting such
fact or circumstance in enforcing the Company’s or Employee’s rights hereunder.




          (b) Date of Termination. “Date of Termination” means (i) if Employee’s employment
is terminated by reason of Employee’s death, the date of Employee’s death; (ii) if Employee’s
employment is terminated by reason of Employee’s Disability, the Disability Effective Date
(provided that Employee shall not have returned to perform, with or without reasonable
accommodation, the essential functions of Employee’s position on a full-time basis during such
30-day period); (iii) if Employee’s employment is terminated by the Company without Cause or by
Employee for Good Reason or without Good Reason, then, subject to Section 7(c), the date
specified in the Notice of Termination (which date shall be a date between the date that the Notice
of Termination is given and 30 days thereafter (inclusive)); (iv) if Employee’s employment is
terminated by the Company for Cause then, subject to Section 7(d), the date on which the
Notice of Termination is given; and (v) if Employee’s employment is terminated due to a Non-Renewal
election by Employee or the Company, the date on which the Term expires.




          (c) Good Reason. Upon Employee’s learning of the occurrence of any event described in the
definition of Good Reason in Section 1(l), Employee may terminate Employee’s employment
hereunder for Good Reason within 60 days thereafter by giving a Notice of Termination to the
Company to that effect, describing in reasonable detail the facts or circumstances giving rise to
Employee’s right to terminate Employee’s employment for Good Reason (and, if applicable, the action
required to cure same). If the effect of the occurrence of the event described in Section
1(l) may be cured, the Company shall have the opportunity to cure any such effect for a period
of 60 days following receipt of Employee’s Notice of Termination. If within 60 days following the
Company’s receipt of a Notice of Termination for Good Reason the Company has not cured the facts or
circumstances giving rise to Employee’s right to terminate




13









 







Employee’s employment for Good Reason,
then the termination by Employee for Good Reason shall be effective as of the date specified in
Employee’s Notice of Termination. If Employee does not give a Notice of Termination to the Company
within 60 days after learning of the occurrence of an event giving rise to Good Reason, then this
Agreement shall remain in effect; provided, however, that the failure of Employee to terminate this
Agreement for Good Reason shall not be deemed a waiver of Employee’s right to terminate Employee’s
employment for Good Reason upon the occurrence of a subsequent event described in Section
1(l) in accordance with the terms of this Agreement. Notwithstanding the foregoing, the right
of Employee to terminate Employee’s employment for
Good Reason under Section 4(d)(i) shall not limit the Company’s right to terminate
Employee’s employment for Cause under Section 4(c) if Cause is determined to exist prior to
the time Good Reason is determined to exist.




          (d) Cause. Upon the Company learning of the occurrence of any event described in
Section 1(d), the Company may at any time terminate Employee’s employment hereunder for
Cause within 60 days thereafter by giving Employee a Notice of Termination to that effect,
describing in reasonable detail the facts or circumstances giving rise to the Company’s right to
terminate Employee’s employment for Cause (and, if applicable, the action required to cure same).
If the Company does not give a Notice of Termination to Employee within 60 days after learning of
the occurrence of an event giving rise to Cause, then this Agreement shall remain in effect;
provided, however, that the failure of the Company to terminate this Agreement for Cause shall not
be deemed a waiver of the Company’s right to terminate Employee’s employment for Cause upon the
occurrence of a subsequent event described in Section 1(d) in accordance with the terms of
this Agreement. Notwithstanding the foregoing, the right of the Company to terminate Employee’s
employment for Cause under Section 4(c) shall not limit Employee’s right to resign for Good
Reason under Section 4(d)(i) if Good Reason is determined to exist prior to the time Cause
is determined to exist.




          (e) Full Settlement; Mitigation. In no event shall Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to Employee under
any of the provisions of this Agreement, and such amounts shall not be reduced whether or not
Employee obtains other employment. The Company shall not be liable to Employee for any damages for
breach of this Agreement in addition to the amounts payable under Section 5 or 6
arising out of the termination of Employee’s employment prior to the end of the Term. The Company
shall be entitled to seek damages from Employee for any breach of Section 8, 9 or
10 by Employee or for Employee’s criminal misconduct.




          (f) Release and Other Agreements. Notwithstanding any other provision in this Agreement to
the contrary, in consideration for receiving the severance benefits described in (i) Sections
5(c)(v), 5(c)(vi) and 5(c)(vii) or (ii) Sections 6(a)(iii)(E),
6(a)(iii)(F) and 6(a)(iii)(G), as the case may be, Employee hereby agrees to
execute (and not revoke) a release in substantially the form attached hereto as Exhibit A
(the “Release”). If Employee fails to properly execute and deliver the Release (or revokes
the Release), Employee agrees that Employee shall not be entitled to receive such severance
benefits. Without limiting the foregoing, in consideration for receiving such severance benefits,
upon any termination of Employee’s employment (other than by reason of death), whether Employee’s
employment is terminated by Employee or by the Company, Employee hereby agrees to resign in
writing, in form and substance reasonably acceptable to the Company, from all officer and/or
director




14









 







positions with the Company or any Subsidiary or Affiliate thereof, effective on the Date
of Termination. For purposes of this Agreement, the Release and the resignation shall be
considered to have been executed by Employee if it is signed by Employee’s
legal representative in the case of Employee’s legal incompetence or on behalf of Employee’s estate
in the case of Employee’s death. Upon Employee’s execution and delivery of the Release, the
Company shall also promptly execute and deliver the Release.




     8. Disclosure of, Access to and Entrustment of Confidential Information, Business Opportunities
and Business Goodwill. During the course of Employee’s employment with the Company (including
during the 180-day period following the Effective Date), the Company shall disclose to Employee, or
place Employee in a position to have access to or develop, Confidential Information (as defined in
Section 9(a)(i)), and/or shall entrust Employee with business opportunities of the Company,
and/or shall place Employee in a position to develop business goodwill on behalf of the Company.
There is a need and desire on the part of the Company and Employee to specify the parties’ rights
and obligations with respect to the ownership and protection of such Confidential Information,
business opportunities and goodwill. Accordingly, as a material inducement to the Company to enter
into this Agreement; in consideration for the compensation and other benefits payable hereunder to
Employee; to protect the Company’s Confidential Information that has been and will be in the future
disclosed or entrusted to Employee (the disclosure of which by Employee in violation of this
Agreement would adversely affect the business goodwill of the Company), the business goodwill of
the Company that has been and will in the future be developed in Employee and the business
opportunities that have been and will in the future be disclosed or entrusted to Employee by the
Company; and for other good and valuable consideration, Employee agrees to comply with, and be
bound by, Sections 9 and 10. As used in this Section 8, “Company” shall
include the Company and any of its Subsidiaries.



     9. Confidential Information; Ownership of Property.



          (a) Obligations to Maintain Confidentiality.




               (i) Employee acknowledges that the Company has trade, business and financial secrets and other
confidential and proprietary information regarding the Company and its business, in whatever form,
tangible or intangible (collectively, the “Confidential Information”), and that, during the
course of Employee’s employment with the Company (including during the 180-day period following the
Effective Date), Employee has received, shall receive or be placed in a position to have access to
or develop Confidential Information. Employee further acknowledges and agrees that Employee’s use
of Confidential Information in the conduct of business on behalf of a competitor of the Company
would constitute unfair competition with the Company and would adversely affect the business
goodwill of the Company. Confidential Information includes sales materials, technical information,
processes and compilations of information, records, specifications and information concerning
customers, prospective customers, customer and prospective customer lists, and information
regarding methods of doing business. As defined herein, Confidential Information shall not include
information that is (i) obtained by Employee from a source other than the Company or its
Affiliates, which source is not under a duty of non-disclosure in regard to such information
or (ii)



15









 







becomes generally available to the public other than through disclosure by Employee in
violation of the provisions of this Agreement.



               (ii) Employee is aware of those policies implemented by the Company to keep its Confidential
Information secret, including those policies limiting the disclosure of information on a
need-to-know basis and requiring the keeping of information in secure areas. Employee acknowledges
that the Confidential Information has been developed or acquired by the Company through the
expenditure of substantial time, effort and money and provides the Company with an advantage over
competitors who do not know or use such Confidential Information.



               (iii) During and following Employee’s employment by the Company, Employee shall hold in
confidence and not directly or indirectly disclose, use (for Employee’s commercial advantage or
otherwise), copy, make lists of, or make available to others any Confidential Information except in
Employee’s good faith performance of Employee’s duties to the Company as an executive of the
Company or to the extent authorized in writing by the Board or required by law or compelled by
legal process. Employee agrees to use reasonable efforts to give the Company notice of any and all
attempts to compel disclosure of any Confidential Information, in such a manner so as to provide
the Company with written notice at least five days before disclosure or within three business days
after Employee is informed that such disclosure is being or shall be compelled, whichever is
earlier. Such written notice shall include a description of the information to be disclosed, the
court, government agency, or other forum through which the disclosure is sought, and the date by
which the information is to be disclosed, and shall contain a copy of the subpoena, order or other
process used to compel disclosure.



               (iv) Employee further agrees not to use any Confidential Information for the benefit of any
person or entity other than the Company.



               (v) Employee agrees that all Confidential Information and other files, documents, materials,
records, notebooks, customer lists, business proposals, contracts, agreements and other
repositories containing information concerning the Company or the business of the Company, in
whatever form, tangible or intangible (including all copies thereof), that Employee shall prepare,
or use, or be provided with as a result of Employee’s employment with the Company, shall be and
remain the sole property of the Company. Upon termination of Employee’s employment hereunder,
Employee agrees that all Confidential Information and other files, documents, materials, records,
notebooks, customer lists, business proposals, contracts, agreements and other repositories
containing information concerning the Company or the business of the Company (including all copies
thereof) in Employee’s possession, custody or control, whether prepared by Employee or others,
shall remain with or be returned to the Company promptly (within 48 hours) after the Date of
Termination. The materials required to be returned pursuant to this Section 9(a)(v) shall
not include personal correspondence or other personal property of Employee that does not relate to
the Company or the business of the Company.



               (vi) Notwithstanding anything herein to the contrary, Employee may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax
treatment and tax structure of the transactions contemplated in this Agreement and all
materials



16









 







of any kind (including opinions and other tax analyses) that are provided to Employee
relating to such tax treatment and tax structure. For this purpose, “tax structure” is limited to
facts relevant to the U.S. federal income tax treatment of the transactions contemplated in this
Agreement and does not include information relating to the identity of the parties hereto.



          (b) Ownership of Work Product. Employee acknowledges that all discoveries, concepts,
ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs,
analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not
including any confidential information) and all registrations or applications related thereto, all
other proprietary information and all similar or related information (whether or not patentable)
that relate to the Company’s or its Affiliates’ actual or anticipated business, research and
development, or existing or future products or services and that are conceived, developed,
contributed to, made, or reduced to practice by Employee (either solely or jointly with others)
while employed by the Company (including any of the foregoing that constitutes any proprietary
information or records) (“Work Product”) belong to the Company or its Affiliates, as
applicable, and Employee hereby assigns, and agrees to assign, all of the above Work Product to the
Company or its Affiliates, as applicable. Any copyrightable work prepared in whole or in part by
Employee in the course of Employee’s work for any of the foregoing entities shall be deemed a “work
made for hire” under the copyright laws, and the Company or its Affiliates, as applicable, shall
own all rights therein. To the extent that any such copyrightable work is not a “work made for
hire,” Employee hereby assigns and agrees to assign to the Company all right, title, and interest,
including without limitation, copyright in and to such copyrightable work. Employee shall promptly
disclose such Work Product and copyrightable work to the Board and perform all actions reasonably
requested by the Board (whether during or after the Term) to establish and confirm the Company’s or
its Affiliates’, as applicable, ownership (including, without limitation, assignments, consents,
powers of attorney, and other instruments).




          (c) As used in this Section 9 “Company” shall include the Company and any of its
Subsidiaries.




     10. Non-Competition; Non-Solicitation; Non-Disparagement.



          (a) For the reasons and consideration specified in Section 8, Employee hereby
covenants and agrees that, during the Term of Non-Competition, Employee shall not, directly or
indirectly, individually or as an officer, director, manager, employee, stockholder, consultant,
contractor, partner, member, joint venturer, agent, equity owner or in any capacity whatsoever:




               (i) own, engage in, manage, operate, join, control, be employed by, provide Competing Services
to, or participate in the ownership, management, operation or control of or provision of Competing
Services to, a Competing Business operating in the Geographic Area;



               (ii) knowingly recruit, hire, assist in hiring, attempt to hire, or contact or solicit with
respect to hiring any Person who, at any time during the 12 month period ending on the Date of
Termination, was an employee of the Company; provided, that Employee may



17









 







hire any Person that
served as an administrative assistant assigned to Employee at the time Employee’s employment with
the Company terminates;



               (iii) induce or attempt to induce any employee of the Company to terminate, or in any way
interfere with, the relationship between the Company and any employee thereof; or



               (iv) induce or attempt to induce any customer, client, patient, supplier, service provider, or
other business relation of the Company in the Geographic Area to cease doing business with the
Company, or in any way interfere with the relationship between the Company and any such Person.



          Notwithstanding the foregoing, the Company agrees that Employee may own less than one percent
of the outstanding voting securities of any publicly traded company that is a Competing Business so
long as Employee does not otherwise participate in such competing business in any way prohibited by
this Section 10. This Section 10(a) shall not apply in the event Company breaches
any of its obligations under Section 5 or 6.




          (b) Employee shall not make any negative or disparaging comments regarding the Company, its
Subsidiaries or Affiliates or any of their respective officers, directors, shareholders, partners,
members, managers, agents or employees (collectively, the “Representatives”), including
regarding the performance of the Company, its Subsidiaries or Affiliates, or otherwise take any
action that could reasonably be expected to adversely affect the Company, its Subsidiaries or
Affiliates or the personal or professional reputation of any of their respective Representatives.
Information required to be disclosed by Employee pursuant to any applicable law, court order,
subpoena, process or governmental decree shall not constitute a violation or breach of this
Section 10(b); provided, that Employee delivers written notice of such required disclosure
to the Company promptly before making such disclosure if such notice is not prohibited by
applicable law, court order, subpoena, process or governmental decree.




          (c) Employee acknowledges that the geographic boundaries, scope of prohibited activities, and
time duration of the preceding paragraphs in this Section 10 (including the defined terms
for “Competing Business,” “Geographic Area,” and “Term of Non-Competition” set forth in Section
1) are reasonable in nature and are no broader than are necessary to maintain the goodwill of
the Company and the confidentiality of its Confidential Information and to protect the goodwill and
other legitimate business interests of the Company, and also that the enforcement of such covenants
would not cause Employee any undue hardship or unreasonably interfere with Employee’s ability to
earn a livelihood. If Employee violates the covenants and restrictions in this Section 10
and the Company brings legal action for injunctive or other equitable relief, Employee agrees that
the Company shall not be deprived of the benefit of the full period of the restrictive covenant, as
a result of the time involved in obtaining such relief. Accordingly, Employee agrees that the
provisions in Section 10(a) shall have a duration determined pursuant to Section
10(a), computed from the date the legal or equitable relief is granted.




          (d) If any court in any jurisdiction determines that any portion of this Section 10
(including the defined terms for “Competing Business,” “Geographic Area,” and




18









 







“Term of
Non-Competition” set forth in Section 1) is invalid or unenforceable within such
jurisdiction under circumstances then existing, the remainder of this Section 10 (including
the defined terms for “Competing Business,” “Geographic Area,” and “Term of Non-Competition” set
forth in Section 1) shall not thereby be affected and shall be given full effect without
regard to the invalid or unenforceable provisions. If any court in any jurisdiction construes any
of the provisions of this Section 10 (including the defined terms for “Competing Business,”
“Geographic Area,” and “Term of Non-Competition” set forth in Section 1) to be invalid or
unenforceable within such jurisdiction under circumstances then existing, because of the duration,
scope or geographical area of such provision, such court shall be required to substitute the
maximum duration, scope or geographical area reasonable under such circumstances within such
jurisdiction for the stated period, scope or area with respect to such jurisdiction and such court
shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope
and area permitted by law, and to enforce such provision as so revised.




          (e) As used in this Section 10 (and the defined terms for “Competing Business,”
“Geographic Area,” and “Term of Non-Competition” set forth in Section 1), “Company” shall
include the Company and any of its Subsidiaries.




     11. Successors; Binding Agreement.



          (a) This Agreement is personal to Employee and shall not be assignable by Employee otherwise
than by will or the by laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by Employee’s personal and legal representatives, executors, administrators,
heirs, distributes, devisees and legatees.




          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.




          (c) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, sale of assets or otherwise) to all or substantially all of the business and/or
assets of the Company, by a written agreement in form and substance reasonably satisfactory to
Employee, to assume expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in
the same amount and on the same terms as Employee would be entitled to pursuant to Section
6 if Employee terminated Employee’s employment for Good Reason after, but before the second
anniversary of, the occurrence of a Change in Control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement and after any such succession, “Company” shall mean the
Company as hereinbefore defined and any successor and/or assigns as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.




     12. Effect of Agreement on Plans and Agreements Governing Awards. Notwithstanding anything
to the contrary contained in any plan or agreement governing an Award granted to Employee prior to,
on or after the date of this Agreement, the respective



19









 







meanings of “Cause” and “disability” as used
in any such plans or agreements shall have the meaning ascribed to such terms by this Agreement for
purposes of giving effect to such Awards on and after the date of this Agreement.



     13. Miscellaneous.



          (a) Construction. This Agreement shall be deemed drafted equally by both the parties. Its
language shall be construed as a whole and according to its fair meaning. Any presumption or
principle that the language is to be construed against any party shall not apply. The headings in
this Agreement are only for convenience and are not intended to affect construction or
interpretation. Any references to paragraphs, subparagraphs, sections, subsections or clauses are
to those parts of this Agreement, unless the context clearly indicates to the contrary. Also,
unless the context clearly indicates to the contrary, (i) the plural includes the singular and the
singular includes the plural; (ii) “and” and “or” are each used both conjunctively and
disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all”, and “each and every”;
(iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder”
and other similar compounds of the word “here” refer to the entire Agreement and not to any
particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the entities or persons referred to may require.




          (b) Notices. All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:




	 	 	 	 	 
	 

	 	if to Employee:
	 	if to the Company:
	 
	 	 	 	 
	 

	 	R. Dirk Allison
	 	Odyssey HealthCare, Inc.
	 

	 	945 DeForest Drive
	 	717 North Harwood, Suite 1500
	 

	 	Coppell, Texas 75019
	 	Dallas, Texas 75201
	 

	 	 	 	Attn: General Counsel
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	P. Gregory Hidalgo
	 

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	3700 Trammell Crow Center
	 

	 	 	 	2001 Ross Avenue
	 

	 	 	 	Dallas, Texas 75201





or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.




          (c) Severability. Except as otherwise provided in Section 10(d), if any provision
of this Agreement is held to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully severable; this




20









 







Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore, except as otherwise
provided in Section 10(d), in lieu of such illegal, invalid or unenforceable provision
there shall be added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.




          (d) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.




          (e) No Waiver. Except as expressly set forth in this Agreement, no waiver by either
party at any time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at any time.




          (f) Equitable and Other Relief. Employee acknowledges that money damages would be both
incalculable and an insufficient remedy for a breach of Sections 8, 9 or 10
by Employee and that any such breach would cause the Company irreparable harm. Accordingly, the
Company, in addition to any other remedies at law or in equity it may have, shall be entitled,
without the requirement of posting of bond or other security, to equitable relief, including
injunctive relief and specific performance, in connection with a breach of Sections 8,
9 or 10 by Employee. The parties agree that the only circumstances in which
disputes between them will not be subject exclusively to arbitration
pursuant to the provisions in Section 13(h) are in connection with a breach of Sections
8, 9 or 10 by Employee. If the Company files a pleading with a court seeking
immediate injunctive relief and this pleading is challenged by Employee and injunctive relief
sought is not awarded, the Company shall pay all of Employee’s costs and attorneys’ fees. The
parties consent to venue in Dallas County, Texas and to the exclusive jurisdiction of competent
state courts or federal courts in the state or district in Dallas County, Texas for all litigation
which may be brought, subject to the requirement for arbitration in Section 13(h), with
respect to the terms of, and the transactions and relationships contemplated by, this Agreement.
The parties further consent to the non-exclusive jurisdiction of any state court located within a
district which encompasses assets of a party against which a judgment has been rendered for the
enforcement of such judgment or award against the assets of such party.




          (g) Entire Agreement. The provisions of this Agreement constitute the entire and
complete understanding and agreement between the parties with respect to the subject matter hereof,
and supersede all prior and contemporaneous oral and written agreements, representations and
understandings of the parties, which are hereby terminated. Employee and the Company acknowledge
and represent that there are no other promises, terms, conditions or representations (or written)
regarding any matter relevant hereto.




          (h) Arbitration. Except as otherwise provided in Section 13(f), in the event any
claim, demand, cause of action, dispute, controversy or other matter in question (“Claim”)
arises out of this Agreement (or its termination) or Employee’s employment (or termination of




21









 







employment) by the Company or its Subsidiaries, then, upon the written request of Employee or the
Company, such dispute or controversy will be submitted to binding arbitration. Any arbitration
will be conducted in accordance with the Federal Arbitration Act (“FAA”) and, to the extent
an issue is not addressed by the FAA or the FAA does not apply, with the then-current National
Rules for the Resolution of Employment Disputes of the American Arbitration Association
(“AAA”) or other rules of the AAA as applicable to the claims asserted. The results of
arbitration will be binding and conclusive on the parties hereto. All parties agree that venue for
arbitration will be in Dallas County, Texas. If Employee is the prevailing party, then Employee
will be entitled to reimbursement by the Company for reasonable attorneys fees, reasonable costs
and other reasonable expenses pertaining to the arbitration. All proceedings conducted pursuant to
this Section 13(h) will be kept confidential by all parties. THE ARBITRATORS SHALL HAVE NO
AUTHORITY TO AWARD PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES (WHETHER IT BE EXEMPLARY DAMAGES,
TREBLE DAMAGES, OR ANY OTHER PENALTY OR PUNITIVE TYPE OF DAMAGES). REGARDLESS OF WHETHER SUCH
DAMAGES MAY BE AVAILABLE UNDER TEXAS LAW, EMPLOYEE AND THE COMPANY EACH HEREBY WAIVE THE RIGHT, IF
ANY, TO RECOVER PUNITIVE DAMAGES IN CONNECTION WITH ANY CLAIMS. EMPLOYEE AND THE COMPANY
ACKNOWLEDGE THAT BY SIGNING THIS AGREEMENT EMPLOYEE AND THE COMPANY ARE WAIVING ANY RIGHT THAT
EMPLOYEE OR THE COMPANY MAY HAVE TO A JURY TRIAL OR,
OTHER THAN AS EXPRESSLY PROVIDED BY SECTION 13(f), A TRIAL BEFORE A JUDGE IN CONNECTION
WITH, OR RELATING TO, A CLAIM.




          (i) Attorney Fees. The prevailing party in any dispute or controversy under or in
connection with this Agreement shall be entitled to reimbursement from the non-prevailing party for
all costs and reasonable legal fees incurred by such prevailing party.




          (j) Survival. Sections 1 and 4 through 13 of this Agreement
shall survive the termination of this Agreement.




          (k) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS OF TEXAS OR
ANY OTHER JURISDICTION, AND, WHERE APPLICABLE, THE LAWS OF THE UNITED STATES.




          (l) Amendments. This Agreement may not be amended or modified at any time except by a
written instrument approved by the Board and executed by the Company and Employee.




          (m) Employee Acknowledgement. Employee acknowledges that Employee has read and
understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any
representatives or promises made by the Company other than those contained in writing herein, and
has entered into this Agreement freely based on Employee’s own judgment.




22









 








          (n) Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and the same instrument.
Any counterpart of this Agreement that has attached to it separate signature pages which together
contain the signature of all parties hereto shall for all purposes be deemed a fully executed
original. Facsimile signatures shall constitute original signatures.




[SIGNATURE PAGE FOLLOWS]




23









 





     IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date and year
first above written.



	 	 	 	 	 
	 	COMPANY:



ODYSSEY HEALTHCARE, INC.

a Delaware corporation

 	 
	 	By:  	/s/ Robert A. Lefton
 	 
	 	 	Robert A. Lefton, President and Chief 	 
	 	 	Executive Officer 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ R. Dirk Allison
 	 
	 	R. Dirk Allison 	 
	 	 	 
	 



[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]