Document:

exv10w6

 

EXHIBIT 10.6

 

EMPLOYMENT AGREEMENT

by and between

ODYSSEY HEALTHCARE, INC.

and

KATHLEEN A. VENTRE

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

	 	 	7	 
	 	 	 	 	(c) Cause

	 	 	8	 
	 	 	 	 	(d) Resignation by Employee

	 	 	8	 
	 	 	 	 	(e) Agreement Not to Terminate

	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	 	5.	 	 	Compensation Upon Termination Prior to a Change in Control
of the Company and After the Second Anniversary of such
Change in Control

	 	 	8	 
	 	 	 	 	(a) Death or Disability

	 	 	8	 
	 	 	 	 	(b) For Cause; Resignation by Employee Without Good Reason; Non-Renewal
Election by Employee or the Company

	 	 	9	 
	 	 	 	 	(c) Without Cause; Resignation by Employee for Good Reason

	 	 	9	 
	 	6.	 	 	Compensation Upon Employment Termination Occurring On or Within Two Years After a Change in
Control of the Company

	 	 	10	 
	 	 	 	 	(a) Compensation Upon Termination

	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	7.	 	 	Other Provisions Relating to Termination

	 	 	12	 
	 	 	 	 	(a) Notice of Termination

	 	 	12	 
	 	 	 	 	(b) Date of Termination

	 	 	12	 
	 	 	 	 	(c) Good Reason

	 	 	13	 
	 	 	 	 	(d) Cause

	 	 	13	 
	 	 	 	 	(e) Full Settlement; Mitigation

	 	 	13	 
	 	 	 	 	(f) Release and Other Agreements

	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	8.	 	 	Disclosure of, Access to and Entrustment of Confidential Information, Business Opportunities and
Business Goodwill

	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	9.	 	 	Confidential Information; Ownership of Property

	 	 	15	 
	 	 	 	 	(a) Obligations to Maintain Confidentiality

	 	 	15	 
	 	10.	 	 	(b) Ownership of Work Product
Non-Competition; Non-Solicitation; Non-Disparagement

	 	 	16

17	 
	 	 	 	 	 
	 	 	 	 
	 	11.	 	 	Successors; Binding Agreement

	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	12.	 	 	Effect of Agreement on Plans and Agreements Governing Awards

	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	13.	 	 	Miscellaneous

	 	 	19	 
	 	 	 	 	(a) Construction

	 	 	19	 
	 	 	 	 	(b) Notices

	 	 	19	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	(c) Severability

	 	 	20	 
	 	 	 	 	(d) Withholding

	 	 	20	 
	 	 	 	 	(e) No Waiver

	 	 	20	 
	 	 	 	 	(f) Equitable and Other Relief

	 	 	20	 
	 	 	 	 	(g) Entire Agreement

	 	 	21	 
	 	 	 	 	(h) Arbitration

	 	 	21	 
	 	 	 	 	(i) Attorney Fees

	 	 	22	 
	 	 	 	 	(j) Survival

	 	 	22	 
	 	 	 	 	(k) Governing Law

	 	 	22	 
	 	 	 	 	(l) Amendments

	 	 	22	 
	 	 	 	 	(m) Employee Acknowledgement

	 	 	22	 
	 	 	 	 	(n) Counterparts

	 	 	22	 

ii

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of
August 1, 2005 (the “Effective Date”), by and between Odyssey HealthCare, Inc., a Delaware
corporation (the “Company”), and Kathleen A. Ventre (“Employee”).

RECITALS:

     A. Employee is the Senior Vice President – Clinical Affairs 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 considers the establishment and maintenance of a sound and vital management
group to be essential to protecting and enhancing its best interests and the best interests of its
stockholders.

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

     D. Employee is desirous of continuing to commit herself to serve the Company and its
Subsidiaries on the terms herein provided.

AGREEMENTS:

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

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

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

          (b) “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with the Person in question. As
used in this definition of “Affiliate,” the term “control” means the possession,

1

 

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:

               (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

2

 

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.

          (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 office of Senior Vice President – Clinical Affairs 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;

3

 

               (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 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.

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 July 31, 2006; provided, however, that commencing on July 31,
2006 (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 – Clinical Affairs 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 a senior vice president –
clinical affairs of an 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

5

 

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 $185,400.00
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 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.

6

 

               (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.

               (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.

     (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).

7

 

     (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 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

8

 

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; and

               (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).

     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

9

 

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 period from the Date of Termination through the first anniversary of the Date of
Termination (such period, the “Severance Period”) in accordance with the customary payroll
practices for executive officers of the Company; provided, however, that Employee shall be entitled
to receive the amount payable pursuant to this Section 5(c)(v) only so long as Employee has
not breached the provisions of Section 8, 9 or 10, at which time the
Company’s payment obligations pursuant to this Section 5(c)(v) shall immediately cease;
provided further, however, that the amount payable pursuant to this Section 5(c)(v) shall
be reduced by the amount of any compensation Employee receives with respect to any other employment
of Employee by another Person during the Severance Period. Employee shall promptly deliver written
notice to the Company of the commencement of any other employment during the Severance Period.
Upon request from time to time, Employee shall
furnish the Company with a true and complete certificate specifying any such compensation
earned or received by Employee during the Severance Period; and

               (vi) 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

10

 

to Section 7(f), Employee shall be entitled to the following compensation from the Company
upon the termination of Employee’s employment during the Term, which shall be in lieu of any other
severance pay or employment benefits to which Employee might otherwise be entitled (whether
contractual or under a severance plan, the WARN Act, any other applicable law, or otherwise):

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

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

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

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

               (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;

11

 

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

               (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;
provided further, however, that the amount payable pursuant to this Section
6(a)(iii)(E) shall be reduced by the amount of any compensation Employee receives with
respect to any other employment of Employee by another Person during the Change in Control
Severance Period. Employee shall promptly deliver written notice to the Company of the
commencement of any other employment during the Change in Control Severance Period. Upon
request from time to time, Employee shall furnish the Company with a true and complete
certificate specifying any such compensation earned or received by Employee during the
Change in Control Severance Period.

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

12

 

without Cause or by
Employee for Good Reason or without Good Reason, then, subject to Section 7(c), the date
specified in the Notice of Termination (which date shall be a date between the date that the Notice
of Termination is given and 30 days thereafter (inclusive)); (iv) if Employee’s employment is
terminated by the Company for Cause then, subject to Section 7(d), the date on which the
Notice of Termination is given; and (v) if Employee’s employment is terminated due to a Non-Renewal
election by Employee or the Company, the date on which the Term expires.

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

13

 

Employee under any of the provisions of this Agreement, and, except as otherwise provided in Sections
5(c)(v) and 6(a)(iii)(E), such amounts shall not be reduced whether or not Employee
obtains other employment. The Company shall not be liable to Employee for any damages for breach
of this Agreement in addition to the amounts payable under Section 5 or 6 arising
out of the termination of Employee’s employment prior to the end of the Term. The Company shall be
entitled to seek damages from Employee for any breach of Section 8, 9 or 10
by Employee or for Employee’s criminal misconduct.

     (f) Release and Other Agreements. Notwithstanding any other provision in this Agreement to
the contrary, in consideration for receiving the severance benefits described in 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.

14

 

     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.

15

 

               (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).

16

 

          (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) 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 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.

          (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.

17

 

          (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

18

 

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:

19

 

	 	 	 	 	 
	if to Employee:

	 	if to the Company:
	 	 
	 
	 	 	 	 
	Kathleen A. Ventre

	 	Odyssey HealthCare, Inc.	 	 
	3709 Fall Wheat Dr.

	 	717 North Harwood, Suite 1500	 	 
	Plano, Texas 75075

	 	Dallas, Texas 75201	 	 
	 

	 	Attn: Chief Executive Officer	 	 
	 
	 	 	 	 
	 

	 	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

20

 

not be subject
exclusively to arbitration pursuant to the provisions in Section 13(h) are in connection
with a breach of Sections 8, 9 or 10 by Employee. If the Company files a
pleading with a court seeking immediate injunctive relief and this pleading is challenged by
Employee and injunctive relief sought is not awarded, the Company shall pay all of Employee’s costs
and attorneys’ fees. The parties consent to venue in Dallas County, Texas and to the exclusive
jurisdiction of competent state courts or federal courts in the state or district in Dallas County,
Texas for all litigation which may be brought, subject to the requirement for arbitration in
Section 13(h), with respect to the terms of, and the transactions and relationships
contemplated by, this Agreement. The parties further consent to the non-exclusive jurisdiction of
any state court located within a district which encompasses assets of a party against which a
judgment has been rendered for the enforcement of such judgment or award against the assets of such
party.

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

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

21

 

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

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

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

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

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

     (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]

22

 

     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/ Richard R. Burnham	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Richard R. Burnham	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Kathleen A. Ventre	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Kathleen A. Ventre	 	 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENTexv10w33

 

EXHIBIT 10.33

****Certain confidential information contained in this document, marked by brackets, has been
omitted and filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.

SILAN-ESS COOPERATION IN VCD AGREEMENT

The Parties:

	 	 	 	 	 
	 

	 	Party A:
	 	Hangzhou Silan Microelectronics Joint-Stock Co., Ltd. ( referred to hereinafter as
“Silan”)
	 

	 	 	 	Address: No. 4 Hang-Zhou Huang Gu Shan Road

                    Post Code: 310012

Telephone:                     Facsimile:
	 
	 		 	 
	 

	 	Party B:
	 	ESS Technology, Inc. (referred to hereinafter as “ESS”)

Address: 48401 Fremont Blvd., Fremont, California 94538, U.S.A

Telephone:                     Facsimile:

RECITALS

	 	 	 
	Ø

	 	ESS’ matured VCD decoding circuitry [****] has been on sale in the market for several years, and has [****] in the
combined China and India VCD market;
	 
	 	 
	Ø

	 	ESS owns all the intellectual property rights [****], and owns the rights to license or assign those rights in any way
to a third party, and ESS has never licensed, assigned or transferred those rights in any manner to any third party;
	 
	 	 
	Ø

	 	Silan has successfully developed a VCD optical servo DSP controller chipset, [****] (one set consists of two pieces),
which can be coupled with ESS’ [****]circuitry;
	 
	 	 
	Ø

	 	Both of the parties have cooperated in selling into VCD systems in China and India over a period of time; and
	 
	 	 
	Ø

	 	Both of the parties wish to advance a mutually beneficial business relationship for the purpose of promoting their
joint market share in China’s and India’s VCD market by enhancing the features and controlling the cost of their joint
products.

Therefore, in consideration of the mutual benefits flowing from cooperation in future VCD products,
both parties agree as follows:

	 	 	 
	1.

	 	Goals and Transfers of Responsibility:
	 
	 	 
	1.1

	 	ESS will assign its [****] distribution contract with FE Global for VCD applications in China
and India to Silan, and Silan will become responsible for managing both China and India sales
and China and India sales channels with respect to the VCD backend decoding circuitry
comprised ESS’ [****] (the “VCD Backend Decoding Circuitry”);
	 
	 	 
	1.2

	 	Silan shall pay [****] to ESS as a product licensing fee (“Product License Fee”) per sale
[****]. For sales made by Silan or its agents in VCD applications in China or India, Silan
may purchase [****]from ESS at ESS’ Manufacturing Cost (the sum of ESS’ cost of die,
packaging, testing, and overhead) plus the [****].

****Confidential Treatment Requested.

1

 

	 	 	 
	1.3

	 	The circuitry shall be under the Silan’s brand name and trademarks and the [****] once
requested by Silan for new production units only. ESS shall not remark any finished goods
inventory.
	 
	 	 
	2.

	 	Scope of License Authorization.

2.1          Subject to compliance by Silan of its obligations hereunder and subject to termination as
provided in this Agreement, ESS hereby grants to Silan the exclusive right to market and sell the
VCD Backend Decoding Circuitry to VCD customers in China and India. For purposes of clarity, ESS
retains the right to sell the [****]in non-VCD applications in China and India, as well as to sell
the [****] in VCD applications in countries other than China and India.

2.2          ESS authorizes Silan to market and sell the VCD Backend Decoding Circuitry under [****] during
the Transition Period defined below in section 6.2.

2.3          Silan is hereby licensed to use or refer to ESS’ product specifications in connection with
marketing and sales of the VCD Backend Decoding Circuitry, to the extent the specifications
accurately represent such circuitry.

2.4          During the term of this Agreement, ESS will not license, assign, transfer or otherwise
distribute the rights as set forth to any person or entity other than Silan.

2.5          To ensure proper processes are used during the production, quality control and sales of the
[****] under this Agreement, ESS shall provide Silan the following technical documentation:

	 	 	 	Ø The technology and quality control documentation related to the circuitry’s
manufacturing, packaging and testing.
	 
	 	 	 	Ø An illustration of the test patterns or test vectors related to the circuitry testing
and product testing.
	 
	 	 	 	Ø VCD firmware and corresponding software development tools needed by existing VCD
applications and customers.

2.6          The parties agree that all right, title and ownership of the technical documents provided by
ESS under section 2.5 of this Agreement is held by ESS, and that Silan is licensed to use such
materials and the information they contain only in testing, quality control, and support of the VCD
Backend Decoding Circuitry. The parties further agree that such materials are confidential and
proprietary ESS information, and that Silan shall exercise no less than reasonable care to protect
the confidentiality of such materials and shall not disclose or disseminate them to anyone other
than Silan employees bound by confidentiality agreements with a need to know the ESS information in
the performance of their job duties associated with the VCD Backend Decoding Circuitry. Upon the
termination of this Agreement, Silan shall return all copies of the materials ESS provided under
section 2.5, in any medium, together with any copies, extracts and derivatives thereof, to ESS.

	 	 	 
	3.

	 	VCD Single-Chip Development

3.1          Following execution of the Agreement, Silan and ESS shall actively pursue integration of
Silan’s servo processor system and ESS’ VCD backend decoding system into a single-chip (the
“Single-Chip VCD”). ESS shall provide Silan with all necessary technical documentation and data
for this project. Further, ESS shall provide email and telephone engineering support to complete
integration. Before merging the ESS IP for the final layout, ESS shall dispatch an engineer to
Silan’s headquarters to provide on-site assistance for no

****Confidential Treatment Requested.

2

 

more than [****], after receiving a written request from Silan. Overall, ESS agrees to make
good faith and reasonable efforts to provide support, both in terms of technical documentation and
service, to achieve complete integration of the Silan servo processor and ESS’ VCD backend decoding
system.

	 	 	 
	3.2

	 	Both parties agree to adopt the [****] for the Single-Chip VCD.
	 
	 	 
	3.3

	 	ESS shall provide the [****] process technology.
	     
	 	 
	3.4

	 	ESS shall license to Silan [****],which will be provided to Silan as soon as the agreement
executed.

3.5          The
only derivative work from ESS licensed technology that Silan shall be allowed to create is the Single-Chip VCD.

3.6          Silan
and ESS will retain their own respective intellectual property rights in the subsystems provided individually to the Single-Chip VCD.

3.7          The Single-Chip VCD will be produced, marketed, and sold under Silan’s brand name, trademarks
and a Silan label.

3.8          During the term of this Agreement, ESS will not license, assign, transfer the Technology
(hereinbefore referred to) to any person or entity other than Silan.

	 	 	 
	4.

	 	Product License Fee
	 
	 	 
	4.1

	 	Because ESS will transfer all the sales rights of the VCD Backend Decoder Circuitry to Silan,
Silan shall pay ESS the product license fee in the amount of
[****]— including, but not
limited to, product licensing and usage fee for the brand name, trademarks, labels and IP,
etc.).
	 
	 	 
	4.2

	 	When the Single-Chip VCD goes into mass production, Silan will share the unit *Gross Margin
[****]. The rationale for this royalty rate includes the consideration that the Single-Chip
VCD contains ESS’ VCD backend decoding features and the license granted to Silan of the
[****].
	 
	 	 
	 

	 	          [****]
	 
	 	 
	 

	 	          [****]
	 
	 	 
	4.3

	 	Silan shall make payment to ESS for the total Product License Fees, plus any associated
purchase costs as described in section 1.4, [****].
	 
	 	 
	4.4

	 	Silan shall also report to ESS on [****] the number of orders, the number of units
distributed, the number of units produced, and the number of products packaged of the VCD
backend Decoding Circuitry and the Single-Chip VCD.
	 
	 	 
	4.5

	 	FE Global (referred in section 5 of this Agreement) is authorized to provide an accounting of
Silan’s product sales to ESS. ESS also has the right to audit Silan’s production and sales
quantity of VCD Backend Decoder Circuitry and Single-Chip VCD not more than once per quarter,
during business hours and upon reasonable notice to Silan. The cost of the audit shall be
borne by ESS unless the audit shows that Silan has underreported its production, orders, or
distribution by at least 5%, in which case the cost of the audit shall be borne by Silan.
	 
	 	 
	4.6

	 	If Silan encounters tremendous pricing pressure during Silan’s marketing and sales of the
VCD Backend Decoder Circuitry (including the future Single-Chip VCD), both parties agree to
meet and

****Confidential Treatment Requested.

3

 

	 	 	 
	4.7

	 	negotiate their joint business, and if both parties agree to do so, to adjust the
Product License Fee or otherwise amend or terminate this Agreement.
	 
	 	 
	5.

	 	Sales Channel Management.
	 
	 	 
	5.1

	 	The current sales [****] is as follows:

	 	Ø	 	 FE Global now has the exclusive right of sales and distribution of [****] in the VCD
market in China.
	 
	 	Ø	 	FE Global retains a customer support team, and ESS also retains a VCD product
technical support team.
	 
	 	Ø	 	 ESS has the right to set FE Global’s [****] with each individual end customer.
	 
	 	Ø	 	FE Global is responsible for collecting all sums due from the end customers; the
accounting cycle between ESS and FE Global is [****].
	 
	 	Ø	 	ESS pays a commission to FE Global in a proportion of the sales amount.

5.2          As of the Effective Date of this Agreement, ESS will exercise its best efforts to accomplish a
transfer of the FE Global relationship to Silan within a commercially reasonable time.

5.3          Except retaining very limited direct Silan customers, Silan will continue the current business
model between ESS and FE Global, with FE Global’s on-going marketing and sales for the VCD
products.

5.4          As of the Effective Date of this Agreement, since ESS will cease research and development,
technical marketing support, and customer support with respect to the VCD Backend Decoding
Circuitry, Silan will offer employment to no less than [****] ESS field application engineers who
are currently supporting the [****], and who may choose to work for Silan.

6.          Transition Management

6.1     Because it will take some period of time for Silan to completely take over the sales management
for the VCD Backend Decoding Circuitry and to help end customers with Silan’s servo processor
system, the concept of a transition period is agreed to by the parties.

6.2          The transition period is defined as the period during which [****](the “Transition Period”).

6.3          Silan, ESS and FE Global will strive to cooperate to maximize the number of end customers using
Silan’s [****] and to promote sales of the VCD Backend Decoding Circuitry.

6.4          When the parties’ Single-Chip VCD is available, Silan shall sell the Single-Chip VCD to ESS at
[****]. The exact amount above Cost shall be the previous month Product License Fee as defined in
Section 4.2.

****Confidential Treatment Requested.

4

 

	 	 	 
	6.5

	 	The parties anticipate that the Transition Period will last [****] this Agreement. The
Transition Period shall terminate when the sales volume of Silan’s servo controller chip
circuitry has reached [****].

6.6                 After termination of the Transition Period Silan shall purchase all of ESS’ remaining
inventory according to the following schedule:

	 	 
	

	6.6.1     [****]
Inventory. [****] inventory shall be set at a purchase price of
[****]. The current Cost of [****]is
[****]. The inventory level as of 8/31/05 is 2.5
million units. After [****], the Cost of [****] new production inventory ([****]) shall
be [****].

          6.6.2     [****]Inventory. Silan shall purchase all of ESS’ [****]at [****].

6.7                
During the Transition Period, ESS shall notify Silan of its sales and inventory status of
[****] for the VCD market in China, on a monthly
basis.

6.8                 During this Transition Period, ESS shall communicate in advance with Silan when ESS intends to
place purchase orders for servo processor circuitry for the VCD market in China [****] . Silan
shall have no right to object to such purchase orders from ESS.

	 	 	 
	6.9

	 	Until Silan goes to mass production with the Single-Chip VCD and discontinues sales of the
[****], Silan shall continue to buy the [****] from ESS at the purchase price of [****].
	 
	 	 
	6.10

	 	During the Transition Period, to meet market fluctuation and customer demands, both Silan and
ESS shall split chipset pricing based upon [****]. The current reference [****]are [****].

7.          Term and Termination

7.1          This Agreement shall become effective as of the date when both parties have
executed it (the “Effective Date”) and shall remain in full force and effect until both Parties
agree in writing to terminate the agreement, or until terminated pursuant to Section 7.2.

7.2          Either
party, in addition to other remedies that it may have, may at its election terminate this Agreement, effective upon written notice to the other party, in the event any of the
following actions or events is committed by the other party or occurs: (1) a default or breach by
the other party of any of its material obligations under this Agreement which default or breach
remains uncured thirty (30) days after the non-breaching party gives written notice thereof; (2)
the other party’s adjudicated bankruptcy, becoming insolvent or entering dissolution or liquidation
proceedings; or (3) a petition filed by or against such other party under bankruptcy law of the
nature of Chapter 7 of the United States Bankruptcy Code or similar foreign law, under corporate
reorganization law or under any other law for the relief of debtors, which is consented to or is
not dismissed within sixty (60) days of filing.

7.3          Upon
termination of this Agreement, all authorizations and rights granted under this Agreement shall cease immediately. Notwithstanding the foregoing, the authorizations and
rights granted under this Agreement shall continue for so long as it is necessary for the other
party to keep such agreements:

	 	 	 	Ø to fill all then-existing orders;
	 
	 	 	 	Ø to fulfill all
then-outstanding maintenance and warranty obligations.

Section 2.6 of this Agreement shall survive any termination of this Agreement.

****Confidential Treatment Requested.

5

 

8.            Limitation of Liability:

8.1          EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NO OTHER WARRANTIES OR REPRESENTATIONS, EITHER
EXPRESSED OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE GIVEN BY EITHER PARTY UNDER THIS
AGREEMENT, including but not limited to, any warranty or representation: (a) as to the validity of
any patent; (b) that any manufacture, importation, sale, lease, use, or other disposition of
products will be free from infringement of a third party’s intellectual property rights; (c) that
either party will enforce any intellectual property rights it may have against third parties; or
(d) as to the quality, merchantability, or fitness for a particular purpose of any product.

8.2          NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME),
ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD
OF SAME.

9.            Indemnification

9.1          ESS
shall indemnify Silan and hold it harmless, and defend Silan from and against all claims, damages, losses and expenses, including court costs and reasonable fees and
expenses of attorneys, expert witnesses, and other professionals, arising out of or resulting from
any action by a third party against Silan that is based on any claim that the portions of the VCD
Backend Decoding Circuitry or Single-Chip VCD as delivered by ESS infringes a patent, copyright, or
any other proprietary right, or violates a third party’s trade secret, except to the extent that
the foregoing results from compliance with specifications provided by Silan, and except to the
extent that the foregoing results from the combination of the ESS portions of the VCD Backend
Decoding Circuitry or Single-Chip VCD with software or equipment not provided by ESS. ESS’
obligation to indemnify Silan as set forth above will be conditioned on Silan promptly (i)
notifying ESS of the existence of such a claim, and (ii) cooperating as reasonably requested by
ESS.

9.2          Silan
shall indemnify ESS and hold it harmless, and defend ESS from and against all claims, damages, losses and expenses, including court costs and reasonable fees and expenses of
attorneys, expert witnesses, and other professionals, arising out of or resulting from any action
by a third party against ESS that is based on any claim that the VCD Backend Decoding Circuitry or
Single-Chip VCD as delivered by Silan infringes a patent, copyright, or any other proprietary
right, or violates a third party’s trade secret. Silan’s obligation to indemnify ESS as set forth
above will be conditioned on ESS promptly (i) notifying Silan of the existence of such a claim, and
(ii) cooperating as reasonably requested by Silan.

10.            Warranties and Representations

10.1          As of the Effective Date, each party represents and warrants to the other party that it (i) is
a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and (ii) has full corporate power and authority and the
legal right to own and operate its property and assets and to carry on its business as it is now
being conducted and is contemplated in this Agreement, including, without limitation, the right to
grant the licenses granted hereunder.

10.2          As of the Effective Date, each party represents and warrants to the other party that it (i)
has the corporate power and authority and the legal right to enter into this Agreement and perform
its obligations hereunder; (ii) has taken all necessary corporate action on its part required to
authorize the execution and delivery of this Agreement and the performance of its obligations
hereunder; and (iii) this Agreement has been duly executed and delivered on behalf of such party,
and constitutes a legal, valid and binding obligation of such party and is enforceable against it
in accordance with its terms.

6

 

10.3          Except as otherwise described in this Agreement, each party represents and warrants to the
other party that all necessary consents, approvals and authorizations of all governmental
authorities and other persons or entities required to be obtained by such party in connection with
entry into this Agreement have been obtained.

10.4          Each party represents and warrants to the other party that the execution and delivery of this
Agreement by such party and the performance of such party’s obligations hereunder (i) do not
conflict with or violate any requirement of any applicable law or regulation or any provision of
the Articles or Certificate of Incorporation or Bylaws of such party in any material way, and (ii)
do not conflict with, violate or breach or constitute a default or require any consent under, any
contractual obligation or court or administrative order by which such party is bound.

10.5          ESS represents and warrants to Silan that ESS owns or controls all right, title and interest
in and to the [****] VCD decoding circuitry and related software, firmware and hardware, the ESS
brand name, and the ESS trademarks; and that ESS has the power to grant the licenses related to and
within this Agreement.

11.            Limitation of Assignment

Neither party shall assign any of its rights or obligations under this Agreement without the prior
written consent of the other party; provided, however, that either party may assign this Agreement
without consent to a successor-in-interest upon a merger, acquisition or sale of all or
substantially all of that party’s assets on condition that the assignee of this Agreement will
undertake by operation of law or has agreed in writing submitted to the other party, to assume all
obligations and liabilities of the assignor under or in connection with this Agreement and to be
bound by the terms and conditions of this Agreement.

12.            Choice of Law And Forum

This Agreement and the performance of the parties hereunder shall be construed in accordance with
and governed by the laws of the state of California, U.S.A., without respect to its conflict of law
provisions. The parties hereto expressly consent, and submit themselves, to the exclusive
jurisdiction of the state or federal courts of the Northern District of California, and both
parties waive all defenses of lack of personal jurisdiction and forum non conveniens in that forum.

13.            Modifications

No waiver of any breach of any provision of this Agreement shall constitute a waiver of any prior,
concurrent or subsequent provision, and no waiver shall be effective unless made in a writing
signed by an authorized representative of the waiving party. No amendment or modification to this
Agreement shall be valid or binding upon the parties unless made in writing and signed by
authorized representatives of the parties.

14.          Entire Agreement

This Agreement contains the full and complete understanding and agreement between the parties
relating to the subject matter hereof and supersedes all prior and contemporary understandings and
agreements, whether oral or written, relating to such subject matter.

15.          Severability

If any provision of this Agreement is or becomes, at any time or for any reason, unenforceable or
invalid, no other provision shall be affected hereby, and the remaining provisions of this
Agreement shall continue in full force and effect.

****Confidential Treatment Requested.

7

 

16.          Notices

All notices permitted or required under this Agreement shall be in writing and shall be by personal
delivery, telegram, telex, tele-copier, or by facsimile transmission, and shall be deemed given
upon personal delivery, five (5) days after deposit in the mail, or upon acknowledgment of receipt
of electronic transmission. Notices shall be sent to the addresses set forth at the beginning of
this Agreement or such other address as either party may specify in writing.

17.          Attorney Fees

If either party employs attorneys to enforce any rights arising out of or relating to this
Agreement, the primarily prevailing party shall be entitled to recover its reasonable attorneys’
fees, costs and other expenses.

18.          Nature of the Agreement

The parties to this Agreement are independent contractors and this Agreement will not establish any
relationship of partnership, joint venture, employment, franchise, or agency between the parties.
Neither party will have the power to bind the other or incur obligations on the other’s behalf
without the other’s prior written consent.

19.          Counterparts

This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts, individually or taken together, shall bear the
signatures of all the parties hereto.

IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS CONTRACT.

	 	 	 	 	 
	Hangzhou Silan Microelectronics Joint-Stock Co., Ltd.	 	ESS Technology, Inc.
	/s/
	Zheng Shao Bo

	 	/s/
	Robert Wong

	Signature	 	Signature
	By:	Zheng Shao Bo

	 	By:	Robert Wong

	 	Name	 	 	Name
	General Manager

	 	VP Worldwide Sales

	Title	 	Title

8

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