exv10w4



 






 

 






EXHIBIT 10.4




SECOND AMENDED AND RESTATED




EMPLOYMENT AGREEMENT




by and between




ODYSSEY HEALTHCARE, INC.




and




DOUGLAS B. CANNON




dated effective as of




August 1, 2005




 

 






 









 












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
	 	 	8	 
	(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 or the Company
	 	 	9	 
	(c) Without Cause; Resignation by Employee for Good Reason
	 	 	10	 
	 
	 	 	 	 
	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
	 	 	14	 
	(d) Cause
	 	 	14	 
	(e) Full Settlement; Mitigation
	 	 	14	 
	(f) Release and Other Agreements
	 	 	15	 
	 
	 	 	 	 
	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
	 	 	18	 
	 
	 	 	 	 
	11. Successors; Binding Agreement
	 	 	19	 
	 
	 	 	 	 
	12. Effect of Agreement on Plans and Agreements Governing Awards
	 	 	20	 
	 
	 	 	 	 
	13. Miscellaneous
	 	 	20	 
	(a) Construction
	 	 	20	 
	(b) Notices
	 	 	20	 






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






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SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT




     THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into effective as of July 1, 2005 (the “Effective Date”), by and between Odyssey
HealthCare, Inc., a Delaware corporation (the “Company”), and Douglas B. Cannon
(“Employee”).



RECITALS:




     A. Employee is a Senior Vice President and the Chief Financial Officer of the Company and is
an integral part of its management who participates in the decision-making process relative to
short and long-term planning and policy for the Company.



     B. The Company and Employee entered into that certain Employment Agreement dated March 1, 1999
(the “Original Employment Agreement”), and amended and restated the Original Employment
Agreement on February 28, 2002 (the “First Amended and Restated Employment Agreement”).



     C. 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.



     D. The Company desires to amend and restate the First Amended and Restated Employment
Agreement as set forth herein in order to induce Employee to remain employed by the Company as an
officer of the Company and its Subsidiaries (as defined in Section 1(o) below), by agreeing
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.



     E. Employee is desirous of continuing to commit 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



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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.



          (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 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 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 or other
conduct materially harmful or potentially materially harmful to the Company’s interest, as
reasonably determined by the Board after a hearing by the Board following 10 days’ prior written
notice to Employee of such hearing;



               (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 the Medicare or Medicaid programs.


The Company may suspend Employee’s title and authority pending the hearing provided for in clause
(ii) above and any such suspension shall not be deemed “Good Reason.”




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



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               (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; 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.



          (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 director or 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.



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          (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;



               (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; or



               (vii) 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 (vii), 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



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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.




          (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.



          (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 July 31, 2008; provided, however, that commencing on July 31,
2008 (the Employment Expiration Date”), and on each July 31st occurring thereafter, the
Term shall automatically (without any action by either party) be extended for one additional
calendar 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 July 31 of the extension period during which the Non-Renewal
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 the chief financial officer of an



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enterprise comparable to the Company. Employee shall report
to the executive officer of the Company to whom Employee currently reports or to such other
executive officer of the Company as the Board may from time to time determine after the date hereof
(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 best efforts to 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 $293,550.00
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, subject to Employee’s rights under
Section 1(l)(iii). 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



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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
executives of the Company (“Investment Plans”), subject to all of the terms and conditions
of such Investment Plans.



               (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
less 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 Employee
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.



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     (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).



     (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. The Company may suspend
Employee’s title and authority, with pay, pending the hearing provided for in the definition of
“Cause” in Section 1(d)(ii), and such suspension shall not be deemed “Good Reason” for
Employee to terminate this Agreement pursuant to Section 4(d)(i).



     (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 effectiveness 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 fifth 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 fifth business day after



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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 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 or
the Company. 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 or the Company, 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 fifth 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) without duplication of any amount payable pursuant to clause (ii) above, solely in the
case of a Non-Renewal by Employee or the Company, 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 fifth
business day after the Company publicly announces its earnings for such calendar year in a press
release); and



               (vi) solely in the case of a Non-Renewal by the Company, 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



9









 




(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(b)(vi) 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(b)(vi) shall immediately cease.




     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 or the Company, Employee shall forfeit all rights to any other compensation.



     (c) Without Cause; Resignation by Employee for Good Reason. 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, 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;



               (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 fifth 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 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



10









 




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 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 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.


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, 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
effectiveness 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



11









 




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; provided,
however, that Employee shall not be entitled to receive the compensation benefits from the Company
set forth in Section 5(b)(vi). 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;




                    (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 fifth 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 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 in Control was consummated (such period, the “Change in 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



12









 






                    (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 (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 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.


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



13









 




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 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



14









 




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 (and not revoke) a release in substantially the form attached
hereto as Exhibit A (the “Release”) and such other documents and agreements as
reasonably required by the Company, in the form and pursuant to the procedures reasonably
established by the Company. If Employee fails to properly execute and deliver the Release and such
other documents or agreements (or revokes the Release or such other documents or agreements),
Employee agrees that Employee shall not
be entitled to receive the severance benefits described in this Agreement. Without limiting the
foregoing, in consideration for receiving the severance benefits described in this Agreement, 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.



     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.



15









 





               (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.



               (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),



16









 




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 orcontrol, 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).



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



17









 





     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) 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 or clerical 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



18









 




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 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



19









 




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:
	Douglas B. Cannon

	 	Odyssey HealthCare, Inc.
	5064 Chaucer Court

	 	717 North Harwood, Suite 1500
	Plano, Texas 75093

	 	Dallas, Texas 75201
	 

	 	Attn: Chief Executive Officer






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	 	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 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



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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.



     (k) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS



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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]




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     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:

Name:
	 	/s/ Richard R. Burnham
 

Richard R. Burnham
	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Douglas B. Cannon	 	 
	 	 	 	 	 
	 	 	Douglas B. Cannon	 	 






[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]