EX-10.5






Exhibit 10.5




 





AMENDED AND RESTATED EMPLOYMENT AGREEMENT




by and between




ODYSSEY HEALTHCARE, INC.




and




CRAIG P. GOGUEN




Effective as of




August 20, 2007




(unless otherwise specified herein)




 





 









 








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	 	 	9	 
	 

	 	(a)
	 	Death
	 	 	9	 
	 

	 	(b)
	 	Disability
	 	 	9	 
	 

	 	(c)
	 	Cause
	 	 	9	 
	 

	 	(d)
	 	Resignation by Employee
	 	 	9	 
	 

	 	(e)
	 	Agreement Not to Terminate
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	5.	 	Compensation Upon Termination Prior to a Change in Control of
the Company and After the Second Anniversary of such Change
in Control	 	 	9	 
	 

	 	(a)
	 	Death or Disability
	 	 	9	 
	 

	 	(b)
	 	For Cause; Resignation by Employee Without Good Reason; Non-Renewal Election by Employee
	 	 	10	 
	 

	 	(c)
	 	Without Cause; Resignation by Employee for Good Reason; Non-Renewal Election by the Company
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	6.	 	Compensation Upon Employment Termination Occurring On or Within Two Years After a Change in Control of the
Company	 	 	12	 
	 

	 	(a)
	 	Compensation Upon Termination
	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	7.	 	Other Provisions Relating to Termination	 	 	15	 
	 

	 	(a)
	 	Notice of Termination
	 	 	15	 
	 

	 	(b)
	 	Date of Termination
	 	 	15	 
	 

	 	(c)
	 	Good Reason
	 	 	16	 
	 

	 	(d)
	 	Cause
	 	 	16	 
	 

	 	(e)
	 	Full Settlement; Mitigation
	 	 	16	 
	 

	 	(f)
	 	Release and Other Agreements
	 	 	17	 
	 

	 	(g)
	 	Six Month Delay
	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	8.	 	Disclosure of, Access to and Entrustment of Confidential Information, Business
Opportunities and Business Goodwill	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	9.	 	Confidential Information; Ownership of Property	 	 	18	 
	 

	 	(a)
	 	Obligations to Maintain Confidentiality
	 	 	18	 
	 

	 	(b)
	 	Ownership of Work Product
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	10.	 	Non-Competition; Non-Solicitation; Non-Disparagement	 	 	20	 






i









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	11.	 	Successors; Binding Agreement	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	12.	 	Effect of Agreement on Plans and Agreements Governing Awards	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	13.	 	Miscellaneous	 	 	22	 
	 

	 	(a)
	 	Construction
	 	 	22	 
	 

	 	(b)
	 	Notices
	 	 	22	 
	 

	 	(c)
	 	Severability
	 	 	23	 
	 

	 	(d)
	 	Withholding
	 	 	23	 
	 

	 	(e)
	 	No Waiver
	 	 	23	 
	 

	 	(f)
	 	Equitable and Other Relief
	 	 	23	 
	 

	 	(g)
	 	Entire Agreement
	 	 	24	 
	 

	 	(h)
	 	Arbitration
	 	 	24	 
	 

	 	(i)
	 	Attorney Fees
	 	 	24	 
	 

	 	(j)
	 	Survival
	 	 	24	 
	 

	 	(k)
	 	Governing Law
	 	 	25	 
	 

	 	(l)
	 	Amendments
	 	 	25	 
	 

	 	(m)
	 	Employee Acknowledgement
	 	 	25	 
	 

	 	(n)
	 	Counterparts
	 	 	25	 







ii









 








AMENDED AND RESTATED EMPLOYMENT AGREEMENT




     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is dated December
23, 2008, to be effective as of August 20, 2007 (unless otherwise specified herein) (the
“Effective Date”), by and between Odyssey HealthCare, Inc., a Delaware corporation (the
“Company”), and Craig P. Goguen (“Employee”).



RECITALS:




     A. The Company is a national provider of hospice services and previously entered into that
certain Employment Agreement effective August 20, 2007 (the “Original Employment
Agreement”) with Employee as the Senior Vice President and Chief Operating Officer of the
Company that provided certain severance benefits to Employee in the event that Employee’s
employment is terminated or changed under the circumstances described in such employment agreement.



     B. The severance benefits provided under the Original Employment Agreement are subject to the
requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).



     C. The Company and Employee desire to amend and restate the Original Employment Agreement to
comply with the requirements of section 409A of the Code.



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.




2









 








          (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 Operating
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;



3









 





               (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.




4









 








          (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 August 19, 2010; provided, however, that commencing on
August 19, 2010 (the Employment Expiration Date”), and on each August 19th 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 August 19th 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 Operating 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 Operating 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, effective January 1, 2008. 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, but in no event later than March 15 of the calendar year following the
calendar year to which such Annual Bonus relates; provided, that if the Board’s determination is
not complete by such day, such that calculation of the amount of such bonus is not administratively
practicable as of March 15, the bonus shall still be treated as being paid no later than March 15
if payment of the bonus is made during the first taxable year of the Employee in which calculation
of the bonus amount is administratively practicable. Notwithstanding anything to the contrary in
this Agreement, Employee shall not be entitled to any Annual Bonus for the 2007 calendar year;
provided, however, Employee’s Annual



6









 







Bonus for the 2008 calendar year shall be determined by the Board based on Employee’s Annual
Base Salary for the 2008 calendar year plus the prorated amount of Employee’s Annual Base Salary
earned for the 2007 calendar year and shall be subject to the achievement of the performance goals
for the 2008 calendar year established by the Board in accordance with this Section
3(b)(ii).



               (iii) Stock Options. On the Effective Date, the Company shall grant Employee an
option to purchase an aggregate of 225,000 shares of the Company’s common stock, which grant shall
be subject to the terms and provisions of the Odyssey HealthCare, Inc. 2001 Equity-Based
Compensation Plan Management Stock Option Agreement, dated August 20, 2007, attached hereto as
Exhibit A and the Odyssey HealthCare, Inc. 2001 Equity-Based Compensation Plan dated as of
November 5, 2001, as amended by that certain First Amendment to the Odyssey HealthCare, Inc. 2001
Equity-Based Compensation Plan dated as of May 5, 2005 and by that certain Second Amendment to the
Odyssey HealthCare, Inc. 2001 Equity-Based Compensation Plan dated as of May 5, 2005.



               (iv) 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.



               (v) 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.



               (vi) 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.



               (vii) 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.



               (viii) 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.



7









 





               (ix) 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 or by this Agreement, shall be
prorated in accordance with the number of days in such calendar year during which Employee is so
employed.



               (x) Relocation Expenses. Company shall reimburse Employee for the following expenses
related to his relocation to the Dallas, Texas metropolitan area:




               (A) Reimbursement for reasonable out-of-pocket expenses incurred by Employee for
packing, moving and unpacking Employee’s household goods, personal effects and two cars from
his current residence in Simsbury, Connecticut (“Former Residence”) to his new
residence in the Dallas, Texas metropolitan area up to a maximum amount of $30,000.00 and
for the travel expenses of Employee and Employee’s wife and children in connection with such
move, subject to the Company’s travel reimbursement policy;




               (B) Reimbursement for reasonable out-of-pocket expenses incurred by Employee for up to
two (2) house hunting trips for Employee and his wife to the Dallas, Texas metropolitan
area, subject to the Company’s travel reimbursement policy; and




               (C) Reimbursement, on a monthly basis, for reasonable out-of-pocket expenses incurred
by Employee for interim living expenses from the Effective Date until the earlier of (1) the
date Employee sells the Former Residence or (2) twelve (12) months after the Effective Date,
in an amount equal to either (x) in the event Employee leases a temporary residence in the
Dallas, Texas metropolitan area before selling the Former Residence, the sum of the actual
monthly lease payment incurred by Employee to lease such temporary residence plus the actual
monthly lease payment incurred by Employee to lease temporary storage for Employee’s
household goods and personal effects or (y) in the event Employee purchases a permanent
residence in the Dallas, Texas metropolitan area before selling the Former Residence, the
sum of the regular monthly payment on the existing mortgage on the Former Residence less the
portion of the monthly payment allocable to principal plus the monthly pro rata amount of
the annual property insurance premium paid by Employee on the Former Residence; provided,
however, the total monthly payments payable by Company to Employee under this Section
3(b)(x)(C) shall not exceed $60,000.00. The reimbursement provided for under this
Section 3(b)(x)(C) is subject to Employee using reasonable efforts to sell the
Former Residence.


To the extent any payments made to Employee under (A), (B) and (C), above,
are not deductible by Employee for federal income tax purposes, Company shall gross up Employee’s
salary by an amount equal to 36.45% of the non-deductible amount paid to Employee. In addition to
the reimbursement of actual relocation related expenses set forth above in this Section
3(b)(x), Company shall pay to Employee a miscellaneous relocation allowance of $20,000.00,
payable within fourteen (14) days following the Effective Date, which amount shall not be subject
to any gross-up for federal or state taxes.




8









 








     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 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,
subject to the provisions of Section 7(g), 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 60 days after the Employee’s Date of Termination, 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



9









 







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 time specified in Section 3(b)(ii) of this Agreement); (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 time specified in Section 3(b)(ii) of this Agreement); (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 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 60 days after Employee’s Date of
Termination;



               (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 time specified in Section 3(b)(ii) of this
Agreement);



               (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 time specified in
Section 3(b)(ii) of this Agreement).



10









 





     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 by Employee) 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 60 days after Employee’s Date of Termination, 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;



               (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 time specified in Section 3(b)(ii) of this Agreement);



               (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) subject to the provisions of Section 7(g), within 60 days after the Employee’s Date of
Termination, a lump sum in cash equal to one times the Employee’s Annual Base Salary as of the Date
of Termination; provided, however, that Employee shall be entitled to receive the amount payable
pursuant to this Section 5(c)(v) only to the extent 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. During the period of time that
Employee would, but for the continued coverage provided pursuant to this Section 5(c)(vi),
be entitled to continuation coverage in these portions of the Welfare Plans pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), if Employee elected
such coverage and paid the applicable premiums (the “COBRA Continuation Period”), coverage
under this Section 5(c)(vi) will be provided to Employee 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. Following the COBRA
Continuation Period, to the extent



11









 







Employee is still entitled to continued coverage pursuant to this Section 5(c)(vi), the
medical, prescription and dental coverage to be continued shall be provided in accordance with the
provisions of Treas. Reg. § 1.409A-3(i)(1)(iv)(A) as it applies to the provision of in-kind
benefits, including but not limited to the requirements that (I) the in-kind benefits provided will
be determined by reference to the objective and nondiscretionary criteria set forth in the
applicable Welfare Plans, (II) the in-kind benefits provided during one taxable year of the
Employee will not affect the in-kind benefits to be provided in any other taxable year (provided,
that a limit imposed on the amount of benefits that may be provided over some or all of the
continuation period described in this Section 5(c)(vi) shall not in and of itself cause the
arrangement described herein to fail to satisfy the requirements of Treas. Reg.
§ 1.409A-3(i)(1)(iv)), and (III) the right to receive in-kind benefits is not subject to
liquidation or exchange for another benefit. Notwithstanding any provision of the foregoing to the
contrary, the continued coverage provided pursuant to this Section 5(c)(vi) will count towards the
depletion of any continued health care coverage rights that Employee and Employee’s dependents may
have pursuant to COBRA, and 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 that does not
limit coverage with respect to any preexisting conditions of Employee or Employee’s dependents, 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 during the 90-day period following
the Date of Termination or such longer period, up to the first anniversary of the Date of
Termination, as the Board may determine in its sole and absolute discretion; provided, however,
that if the terms of the plan or agreement governing such Awards (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; provided, further, however,
that in no event shall Employee be entitled to exercise such Awards on any date later than the
earlier of (A) the latest date upon such the Award could have expired by its original terms under
any circumstances, or (B) the tenth anniversary of the original date of grant of the Award.



     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, subject to the provisions of Section 7(g), be
entitled to the following compensation from the Company upon the termination of



12









 







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 a Non Renewal by Employee) 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 60 days after Employee’s Date of Termination, 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;




               (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 time specified in
Section 3(b)(ii) of this Agreement);




               (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;



13









 






               (E) subject to the provisions of Section 7(g), within 60 days after the
Employee’s Date of Termination, a lump sum in cash equal to one times the Employee’s Annual
Base Salary at its highest rate during the 24 month period preceding the Date of Termination
or, if greater, equal to the aggregate amount of Annual Base Salary at its highest rate
during the preceding 24 month period that the Employee would have received if the Employee
had remained employed by the Company through the second anniversary of the date on which the
Change in Control was consummated; provided, however, that Employee shall be entitled to
receive the amount payable pursuant to this Section 6(a)(iii)(E) only to the extent 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;




               (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. During
the COBRA Continuation Period, coverage under this Section 6(a)(iii)(F) will be
provided to Employee 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. Following the COBRA Continuation Period,
to the extent Employee is still entitled to continued coverage pursuant to this Section
6(a)(iii)(F), the medical, prescription and dental coverage to be continued shall be
provided in accordance with the provisions of Treas. Reg. § 1.409A-3(i)(1)(iv)(A) as it
applies to the provision of in-kind benefits, including but not limited to the requirements
that (I) the in-kind benefits provided will be determined by reference to the objective and
nondiscretionary criteria set forth in the applicable Welfare Plans, (II) the in-kind
benefits provided during one taxable year of the Employee will not affect the in-kind
benefits to be provided in any other taxable year (provided, that a limit imposed on the
amount of benefits that may be provided over some or all of the continuation period
described in this Section 6(a)(iii)(F) shall not in and of itself cause the arrangement
described herein to fail to satisfy the requirements of Treas. Reg. § 1.409A-3(i)(1)(iv)),
and (III) the right to receive such in-kind benefits is not subject to liquidation or
exchange for another benefit. Notwithstanding any provision of the foregoing to the
contrary, the continued coverage provided pursuant to this Section 6(a)(iii)(F) will count
towards the depletion of any continued health care coverage rights that Employee and
Employee’s dependents may have pursuant to COBRA, and 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 that does not limit coverage with respect to any
preexisting conditions of Employee or Employee’s dependents, 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),



14









 







Employee shall be entitled to exercise Employee’s Awards that are vested as of the Date
of Termination during the 90-day period following the Date of Termination or such longer
period, up to the first anniversary of the Date of Termination, as the Board may determine
in its sole and absolute discretion; 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 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; provided,
further, however, that in no event shall Employee be entitled to exercise such Awards on any
date later than the earlier of (I) the latest date upon such the Award could have expired by
its original terms under any circumstances, or (II) the tenth anniversary of the original
date of grant of the Award.



     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. Notwithstanding the
foregoing, in no event shall the Date of Termination occur prior to the date the Employee incurs a
“separation from service” within the meaning of section
409A of the Code, and the guidance promulgated thereunder (collectively, the “Nonqualified
Deferred Compensation Rules”).




15









 








          (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 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



16









 







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 this
Agreement, Employee hereby agrees to execute within forty-five (45) days of the Date of Termination
(and not revoke thereafter) a release in substantially the form attached hereto as Exhibit
B (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 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.



          (g) Six Month Delay. Notwithstanding any time of payment otherwise designated in
Section 5 or Section 6 hereof, if on Employee’s Date of Termination he is a
“specified employee” within the meaning of the Nonqualified Deferred Compensation Rules, any
amounts payable to Employee by reason of his termination of employment with the Company pursuant to
Section 5(c)(v) or Section 6(a)(iii)(E) hereof shall not be paid to Employee until
the date that is six months and one day following the Date of Termination.



     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.



17









 





     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) 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.



18









 





               (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 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).




19









 








          (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 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.



20









 





          (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 “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



21









 







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 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:
	 
	Craig P. Goguen

	 	Odyssey HealthCare, Inc.
	3912 Wood Lake Drive

	 	717 North Harwood, Suite 1500
	Plano, Texas 75093

	 	Dallas, Texas 75201





22









 





	 	 	 
	 

	 	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
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



23









 







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
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.



24









 





          (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.



          (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]




25









 





     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/ Craig P. Goguen
 	 
	 	Craig P. Goguen 	 



[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]