Document:

Exhibit 10.10

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of this 20th day of March, 2019, by and between AdaptHealth Holdings LLC, a Delaware limited liability company (the “Company”), and Josh Parnes (“Executive”).

 

W I T N E S S E T H :

 

WHEREAS, Executive is currently employed by the Company as its President; and

 

WHEREAS, Executive is a party to an employment agreement with the Company, dated May 17, 2018 (the “Prior Agreement”); and

 

WHEREAS, the Company desires to employ Executive and to enter into this Agreement embodying the terms of such employment, and Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and Executive hereby agree as follows:

 

Section 1.                                          Definitions.

 

(a)                                 “Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary through the date of termination of Executive’s employment, (ii) any unpaid or unreimbursed expenses incurred in accordance with Section 7 hereof, and (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment (excluding any employee benefit plan providing for severance or similar benefits), in accordance with the terms contained therein.

 

(b)                                 “Agreement” shall have the meaning set forth in the preamble hereto.

 

(c)                                  “Annual Bonus” shall have the meaning set forth in Section 4(b) hereof.

 

(d)                                 “Base Salary” shall mean the salary provided for in Section 4(a) hereof or any increased salary granted to Executive pursuant to Section 4(a) hereof.

 

(e)                                  “Board” shall mean the Board of Managers of the Company.

 

(f)                                   “Cause” shall mean (i) Executive’s act(s) of gross negligence or willful misconduct in the course of Executive’s employment hereunder, (ii) willful failure or refusal by Executive to perform in any material respect Executive’s duties or responsibilities under this Agreement, (iii) misappropriation (or attempted misappropriation) by Executive of any assets or business opportunities of the Company or any other member of the Company Group, (iv) theft, embezzlement or fraud committed (or attempted) by Executive, at Executive’s direction, or with Executive’s prior actual knowledge, (v) Executive’s conviction of or pleading “guilty” or “no contest” to, (x) a felony or (y) any other criminal charge that has, or could be reasonably expected to have, an adverse impact on the performance of Executive’s duties to the Company or any other member of the Company Group or otherwise result in material injury to the reputation or business

 

 

of the Company or any other member of the Company Group, (vi) any material violation by Executive of the policies of the Company including but not limited to those relating to sexual harassment or business conduct, and those otherwise set forth in the manuals or statements of policy of the Company, (vii) Executive’s material breach of this Agreement or breach of the Restrictive Covenant Agreement, (viii) any willful act or omission to act of Executive that is intended to result in material injury to the business, property, operations, financial condition or reputation of the Company or any other member of the Company Group, or (ix) Executive’s willful failure to reasonably cooperate, if requested by the Board, with any investigation or inquiry into Executive’s or the Company’s business practices (in each case, to the extent related to the Company or any other member of the Company Group), whether internal or external, including, but not limited to, Executive’s refusal to be deposed or to provide truthful testimony or evidence at any trial, proceeding or inquiry. If, within ninety (90) days subsequent to Executive’s termination for any reason other than by the Company for Cause, the Company determines that Executive’s employment could have been terminated for Cause pursuant to clauses (iii), (iv), or (v) of the definition thereof, Executive’s employment will be deemed to have been terminated for Cause for all purposes, and Executive will be required to disgorge to the Company all amounts received pursuant to this Agreement or otherwise on account of such termination that would not have been payable to Executive had such termination been by the Company for Cause.

 

(g)                                  “Closing Date” shall have the meaning set forth in the Purchase Agreement.

 

(h)                                 “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

(i)                                     “Company” shall have the meaning set forth in the preamble hereto.

 

(j)                                    “Company Group” shall mean the Company together with any direct or indirect subsidiaries of the Company.

 

(k)                                 “Compensation Committee” shall mean the Board or the committee of the Board designated to make compensation decisions relating to senior executive officers of the Company Group.

 

(l)                                     “Delay Period” shall have the meaning set forth in Section 13(a) hereof.

 

(m)                             “Disability” shall mean any physical or mental disability or infirmity of Executive that prevents the performance of Executive’s duties for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any consecutive twelve (12) month period. Any question as to the existence, extent, or potentiality of Executive’s Disability upon which Executive and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and approved by Executive (which approval shall not be unreasonably withheld). The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

 

(n)                                 “Executive” shall have the meaning set forth in the preamble hereto.

 

(o)                                 “Good Reason” shall mean, without Executive’s consent, (i) a material diminution in Executive’s title, duties, or responsibilities as set forth in Section 3 hereof, (ii) a material

 

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reduction in Base Salary set forth in Section 4(a) hereof or Annual Bonus opportunity set forth in Section 4(b) hereof, (iii) the relocation of Executive’s principal place of employment (as provided in Section 3(c) hereof) more than fifty (50) miles from its current location, or (iv) any other material breach of a provision of this Agreement by the Company (other than a provision that is covered by clause (i), (ii), or (iii) above). Executive acknowledges and agrees that Executive’s exclusive remedy in the event of any breach of this Agreement shall be to assert Good Reason pursuant to the terms and conditions of Section 8(e) hereof. Notwithstanding the foregoing, during the Term, in the event that the Company reasonably believes that Executive may have engaged in conduct that could constitute Cause hereunder, the Company may, in its sole and absolute discretion, suspend Executive from performing Executive’s duties hereunder for up to sixty (60) days, and in no event shall any such suspension constitute an event pursuant to which Executive may terminate employment with Good Reason or otherwise constitute a breach hereunder; provided, that no such suspension shall alter the Company’s obligations under this Agreement during such period of suspension.

 

(p)                                 “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.

 

(q)                                 “Prior Agreement” shall have the meaning set forth in the recitals hereto.

 

(r)                                    “Profits Interest” has the meaning specified in Section 4(c) hereof.

 

(s)                                   “Purchase Agreement” shall mean that certain Note and Unit Purchase Agreement between BM AH Holdings, LLC and the Company, dated as of February 27, 2019.

 

(t)                                    “Release of Claims” shall mean the Release of Claims in substantially the same form attached hereto as Exhibit B (as the same may be revised from time to time by the Company upon the advice of counsel).

 

(u)                                 “Restrictive Covenant Agreement” shall mean the Restrictive Covenant Agreement attached hereto as Exhibit A.

 

(v)                                 “Severance Benefits” shall have the meaning set forth in Section 8(g) hereof.

 

(w)                               “Severance Term” shall mean the twenty four (24) month period following Executive’s termination by the Company without Cause (other than by reason of death or Disability) or by Executive for Good Reason.

 

(x)                                 “Term” shall mean the period specified in Section 2 hereof.

 

Section 2.                                          Acceptance and Term.

 

The Company agrees to employ Executive, and Executive agrees to serve the Company, on the terms and conditions set forth herein. The Term shall commence on the date hereof and shall continue until terminated as provided in Section 8 hereof.

 

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Section 3.                                          Position, Duties, and Responsibilities; Place of Performance.

 

(a)                                 Position, Duties, and Responsibilities. During the Term, Executive shall be employed and serve as the President of the Company (together with such other position or positions consistent with Executive’s title as the Board shall specify from time to time) and shall have such duties and responsibilities commensurate with such title. Executive also agrees to serve as an officer and/or director of any other member of the Company Group, in each case without additional compensation.

 

(b)                                 Performance. Executive shall devote Executive’s full business time, attention, skill, and best efforts to the performance of Executive’s duties under this Agreement and shall not engage in any other business or occupation during the Term, including, without limitation, any activity that (x) conflicts with the interests of the Company or any other member of the Company Group, (y) interferes with the proper and efficient performance of Executive’s duties for the Company, or (z) interferes with Executive’s exercise of judgment in the Company’s best interests. Notwithstanding the foregoing, nothing herein shall preclude Executive from (i) serving, with the prior written consent of the Board, as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses and charitable organizations, (ii) engaging in charitable activities and community affairs, and (iii) managing Executive’s personal investments and affairs; provided, however, that the activities set out in clauses (i), (ii), and (iii) shall be limited by Executive so as not to materially interfere, individually or in the aggregate, with the performance of Executive’s duties and responsibilities hereunder.

 

(c)                                  Principal Place of Employment. Executive’s principal place of employment shall be in the Company’s office in Lakewood, New Jersey, although Executive understands and agrees that Executive may be required to travel from time to time for business reasons.

 

Section 4.                                          Compensation.

 

During the Term, Executive shall be entitled to the following compensation:

 

(a)                                 Base Salary. Executive shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of not less than $500,000, with increases, if any, as may be approved in writing by the Compensation Committee.

 

(b)                                 Annual Bonus. Executive shall be eligible for an annual incentive bonus award determined by the Compensation Committee in respect of each fiscal year during the Term (the “Annual Bonus”). The target Annual Bonus for each fiscal year (commencing with the 2019 fiscal year) shall be 100% of Base Salary, with the actual Annual Bonus payable being based upon the level of achievement of annual Company and individual performance objectives for such fiscal year, as determined by the Compensation Committee and communicated to Executive. The Annual Bonus shall be paid to Executive at the same time as annual bonuses are generally payable to other senior executives of the Company subject to Executive’s continuous employment through the payment date except as otherwise provided for in this Agreement.

 

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(c)                                  Equity Awards.

 

(i)                                     Accelerated Vesting of Existing Incentive Units. Notwithstanding anything to the contrary, all unvested Incentive Units (as defined in the Company’s operating agreement) held by Executive as of the date hereof shall, without any further action by Executive or the Company, fully vest effective as of the closing of the transactions contemplated by the Purchase Agreement, subject to Executive’s continuous employment with the Company through the closing.

 

(ii)                                  New Profits Interests. On or promptly following the Closing Date and subject to the approval of the Board, the Company shall grant to Executive “profits interests” (the “Profits Interests”) that will entitle Executive to not less than 2% of the appreciation in the value of the Company’s equity value above the equity value on the Closing Date. The Profits Interests shall be subject to an award agreement which will contain such terms and conditions as the Board determines appropriate in its sole discretion and the terms and conditions of the Company’s operating agreement, as in effect from time to time.

 

Section 5.                                          Employee Benefits.

 

During the Term, Executive shall be entitled to participate in health, insurance, retirement, and other benefits provided generally to similarly situated employees of the Company. Executive shall also be entitled to the same number of holidays, vacation days, and sick days, as well as any other benefits, in each case as are generally allowed to similarly situated employees of the Company in accordance with the Company policy as in effect from time to time. Nothing contained herein shall be construed to limit the Company’s ability to amend, suspend, or terminate any employee benefit plan or policy at any time without providing Executive notice, and the right to do so is expressly reserved.

 

Section 6.                                          Key-Man Insurance.

 

At any time during the Term, the Company shall have the right to insure the life of Executive for the sole benefit of the Company, in such amounts, and with such terms, as it may determine. All premiums payable thereon shall be the obligation of the Company. Executive shall have no interest in any such policy, but agrees to cooperate with the Company in procuring such insurance by submitting to physical examinations, supplying all information required by the insurance company, and executing all necessary documents, provided that no financial obligation is imposed on Executive by any such documents.

 

Section 7.                                          Reimbursement of Business Expenses.

 

During the Term, the Company shall pay (or promptly reimburse Executive) for documented, out-of-pocket expenses reasonably incurred by Executive in the course of performing Executive’s duties and responsibilities hereunder, which are consistent with the Company’s policies in effect from time to time with respect to business expenses, subject to the Company’s requirements with respect to reporting of such expenses.

 

Section 8.                                          Termination of Employment.

 

(a)                                 General. The Term shall terminate earlier than as provided in Section 2 hereof upon the earliest to occur of (i) Executive’s death, (ii) a termination by reason of a Disability, (iii) a termination by the Company with or without Cause, and (iv) a termination by Executive with or

 

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without Good Reason. Upon any termination of Executive’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, Executive shall be deemed to have resigned from any and all directorships, committee memberships, and any other positions Executive holds with the Company or any other member of the Company Group and hereby agrees to execute any documents that the Company (or any member of the Company Group) determines necessary to effectuate such resignations. Notwithstanding anything herein to the contrary, the payment (or commencement of a series of payments) hereunder of any “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as Executive has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such nonqualified deferred compensation (calculated as of the date of Executive’s termination of employment hereunder) shall be paid (or commence to be paid) to Executive on the schedule set forth in this Section 8 as if Executive had undergone such termination of employment (under the same circumstances) on the date of Executive’s ultimate “separation from service.”

 

(b)                                 Termination Due to Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death. The Company may terminate Executive’s employment immediately upon the occurrence of a Disability, such termination to be effective upon Executive’s receipt of written notice of such termination. Upon Executive’s death or in the event that Executive’s employment is terminated due to Executive’s Disability, Executive or Executive’s estate or Executive’s beneficiaries, as the case may be, shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other senior executives of the Company, but in no event later than the date that is two and one-half (21⁄2) months following the last day of the fiscal year in which such termination occurred.

 

Following Executive’s death or a termination of Executive’s employment by reason of a Disability, except as set forth in this Section 8(b), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

 

(c)                                  Termination by the Company with Cause.

 

(i)                                     The Company may terminate Executive’s employment at any time with Cause, effective upon Executive’s receipt of written notice of such termination; provided, however, that with respect to any Cause termination relying on clause (ii) or (vi) of the definition of Cause set forth in Section 1(f) hereof, to the extent that such act or acts or failure or failures to act are curable, Executive shall be given not less than ten (10) days’ written notice by the Board of the Company’s intention to terminate him with Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination with Cause is based, and such termination shall be effective at the expiration of such ten (10) day notice period unless Executive has fully cured such act or acts or failure or failures to act that give rise to Cause during such period.

 

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(ii)                                  In the event that the Company terminates Executive’s employment with Cause, Executive shall be entitled only to the Accrued Obligations. Following such termination of Executive’s employment with Cause, except as set forth in this Section 8(c)(ii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

 

(d)                                 Termination by the Company without Cause. The Company may terminate Executive’s employment at any time without Cause, effective upon Executive’s receipt of written notice of such termination. In the event that Executive’s employment is terminated by the Company without Cause (other than due to death or Disability), Executive shall be entitled to:

 

(i)                                     The Accrued Obligations;

 

(ii)                                  Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other senior executives of the Company, but in no event later than the date that is two and one-half (21⁄2) months following the last day of the fiscal year in which such termination occurred;

 

(iii)                               Continued payment of Base Salary during the Severance Term, payable in accordance with the Company’s regular payroll practices; and

 

(iv)                              An amount equal to two (2) times Executive’s then-current target Annual Bonus, payable in substantially equal installments during the Severance Term in accordance with the Company’s regular payroll practices. Notwithstanding the foregoing, the payments and benefits described in clauses (ii), (iii) and (iv) above shall immediately terminate, and the Company shall have no further obligations to Executive with respect thereto, in the event that Executive breaches any provision of the Restrictive Covenant Agreement. Following such termination of Executive’s employment by the Company without Cause, except as set forth in this Section 8(d), Executive shall have no further rights to any compensation or any other benefits under this Agreement. For the avoidance of doubt, Executive’s sole and exclusive remedy upon a termination of employment by the Company without Cause shall be receipt of the Severance Benefits.

 

(e)                                  Termination by Executive with Good Reason. Executive may terminate Executive’s employment with Good Reason by providing the Company ten (10) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the first occurrence of such event. During such ten (10) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, Executive’s termination will be effective upon the expiration of such cure period, and Executive shall be entitled to the same payments and benefits as provided in Section 8(d) hereof for a termination by the Company without Cause, subject to the same conditions on payment and benefits as described in Section 8(d) hereof. Following such termination of Executive’s employment by Executive with Good Reason, except as set forth in this Section 8(e), Executive shall have no further rights to any compensation or any other benefits under this Agreement. For the avoidance of doubt, Executive’s sole and exclusive remedy upon a termination of employment with Good Reason shall be receipt of the Severance Benefits.

 

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(f)                                   Termination by Executive without Good Reason. Executive may terminate Executive’s employment without Good Reason by providing the Company sixty (60) days’ written notice of such termination. In the event of a termination of employment by Executive under this Section 8(f), Executive shall be entitled only to the Accrued Obligations. In the event of termination of Executive’s employment under this Section 8(f), the Company may, in its sole and absolute discretion, by written notice accelerate such date of termination without changing the characterization of such termination as a termination by Executive without Good Reason. Following such termination of Executive’s employment by Executive without Good Reason, except as set forth in this Section 8(f), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

 

(g)                                  Release. Notwithstanding any provision herein to the contrary, the payment of any amount or provision of any benefit pursuant to subsection (b), (d), or (e) of this Section 8 (other than the Accrued Obligations) (collectively, the “Severance Benefits”) shall be conditioned upon Executive’s execution, delivery to the Company, and non-revocation of the Release of Claims (and the expiration of any revocation period contained in such Release of Claims) within sixty (60) days following the date of Executive’s termination of employment hereunder. If Executive fails to execute the Release of Claims in such a timely manner so as to permit any revocation period to expire prior to the end of such sixty (60) day period, or timely revokes Executive’s acceptance of such release following its execution, Executive shall not be entitled to any of the Severance Benefits. Further, (i) to the extent that any of the Severance Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Code, any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60th) day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day and (ii) to the extent that any of the Severance Benefits do not constitute “nonqualified deferred compensation” for purposes of Section 409A of the Code, any payment of any amount or provision of any benefit otherwise scheduled to occur following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following the date the Release of Claims is timely executed and the applicable revocation period has ended, after which, in each case, any remaining Severance Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein. For the avoidance of doubt, in the event of a termination due to Executive’s death or Disability, Executive’s obligations herein to execute and not revoke the Release of Claims may be satisfied on Executive’s behalf by Executive’s estate or a person having legal power of attorney over Executive’s affairs.

 

Section 9.                                          Restrictive Covenant Agreement.

 

As a condition of, and prior to commencement of, Executive’s employment with the Company, Executive shall have executed and delivered to the Company the Restrictive Covenant Agreement. The parties hereto acknowledge and agree that this Agreement and the Restrictive Covenant Agreement shall be considered separate contracts, and the Restrictive Covenant Agreement will survive the termination of this Agreement for any reason.

 

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Section 10.                                   Representations and Warranties of Executive.

 

Executive represents and warrants to the Company that—

 

(a)                                 Executive is entering into this Agreement voluntarily and that Executive’s employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by Executive of any agreement to which Executive is a party or by which Executive may be bound;

 

(b)                                 Executive has not violated, and in connection with Executive’s employment with the Company will not violate, any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer by which Executive is or may be bound; and

 

(c)                                  in connection with Executive’s employment with the Company, Executive will not use any confidential or proprietary information Executive may have obtained in connection with employment with any prior employer.

 

Section 11.                                   Taxes.

 

The Company may withhold from any payments made under this Agreement all applicable taxes, including but not limited to income, employment, and social insurance taxes, as shall be required by law. Executive acknowledges and represents that the Company has not provided any tax advice to Executive in connection with this Agreement and that Executive has been advised by the Company to seek tax advice from Executive’s own tax advisors regarding this Agreement and payments that may be made to Executive pursuant to this Agreement, including specifically, the application of the provisions of Section 409A of the Code to such payments.

 

Section 12.                                   Set Off; Mitigation.

 

The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim, or recoupment of amounts owed by Executive to the Company or its affiliates; provided, however, that to the extent any amount so subject to set-off, counterclaim, or recoupment is payable in installments hereunder, such set-off, counterclaim, or recoupment shall not modify the applicable payment date of any installment, and to the extent an obligation cannot be satisfied by reduction of a single installment payment, any portion not satisfied shall remain an outstanding obligation of Executive and shall be applied to the next installment only at such time the installment is otherwise payable pursuant to the specified payment schedule. Executive shall not be required to mitigate the amount of any payment or benefit provided pursuant to this Agreement by seeking other employment or otherwise, and the amount of any payment or benefit provided for pursuant to this Agreement shall not be reduced by any compensation earned as a result of Executive’s other employment or otherwise.

 

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Section 13.                                   Additional Section 409A Provisions.

 

Notwithstanding any provision in this Agreement to the contrary—

 

(a)                                 Any payment otherwise required to be made hereunder to Executive at any date as a result of the termination of Executive’s employment shall be delayed for such period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”). On the first business day following the expiration of the Delay Period, Executive shall be paid, in a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule set forth herein.

 

(b)                                 Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code.

 

(c)                                  To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.

 

(d)                                 While the payments and benefits provided hereunder are intended to be structured in a manner to avoid the implication of any penalty taxes under Section 409A of the Code, in no event whatsoever shall the Company or any of its affiliates be liable for any additional tax, interest, or penalties that may be imposed on Executive as a result of Section 409A of the Code or any damages for failing to comply with Section 409A of the Code (other than for withholding obligations or other obligations applicable to employers, if any, under Section 409A of the Code).

 

Section 14.                                   Successors and Assigns; No Third-Party Beneficiaries.

 

(a)                                 The Company. This Agreement shall inure to the benefit of the Company and its respective successors and assigns. Neither this Agreement nor any of the rights, obligations, or interests arising hereunder may be assigned by the Company to a Person (other than another member of the Company Group, or its or their respective successors) without Executive’s prior written consent (which shall not be unreasonably withheld, delayed, or conditioned); provided, however, that in the event of a sale of all or substantially all of the assets of the Company or any direct or indirect division or subsidiary thereof to which Executive’s employment primarily relates, the Company may provide that this Agreement will be assigned to, and assumed by, the acquiror of such assets, it being agreed that in such circumstances, Executive’s consent will not be required in connection therewith.

 

(b)                                 Executive. Executive’s rights and obligations under this Agreement shall not be transferable by Executive by assignment or otherwise, without the prior written consent of the Company; provided, however, that if Executive shall die, all amounts then payable to Executive

 

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hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or if there be no such designee, to Executive’s estate.

 

(c)                                  No Third-Party Beneficiaries. Except as otherwise set forth in Section 8(b) or Section 14(b) hereof, nothing expressed or referred to in this Agreement will be construed to give any Person other than the Company, the other members of the Company Group, and Executive any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

 

Section 15.                                   Waiver and Amendments.

 

Any waiver, alteration, amendment, or modification of any of the terms of this Agreement shall be valid only if made in writing and signed by each of the parties hereto; provided, however, that any such waiver, alteration, amendment, or modification must be consented to on the Company’s behalf by the Board. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

 

Section 16.                                   Severability.

 

If any covenants or such other provisions of this Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof.

 

Section 17.                                   Governing Law and Jurisdiction.

 

EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THE VALIDITY, INTERPRETATION, CONSTRUCTION, AND PERFORMANCE OF THIS AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS RULES. ALL DISPUTES AND CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE FINALLY SETTLED AND BINDING UNDER THE RULES OF INTERNATIONAL COMMERCIAL DISPUTE RESOLUTION OF THE AMERICAN ARBITRATION ASSOCIATION. THE PLACE OF ARBITRATION SHALL BE NEW YORK, NEW YORK. ANY SUCH ARBITRATION SHALL BE CONDUCTED BY A SINGLE ARBITRATOR APPOINTED IN ACCORDANCE WITH ICDR RULES. ANY AWARD, VERDICT OR SETTLEMENT ISSUED UNDER SUCH ARBITRATION MAY BE ENTERED BY ANY PARTY FOR ORDER OF ENFORCEMENT BY ANY COURT OF COMPETENT JURISDICTION. THE ARBITRATOR SHALL HAVE THE POWER TO TAKE INTERIM MEASURES HE OR SHE DEEMS NECESSARY, INCLUDING INJUNCTIVE RELIEF AND MEASURES FOR THE PROTECTION OR CONSERVATION OR PROPERTY.

 

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Section 18.                                   Notices.

 

(a)                                 Place of Delivery. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all notices and communications by Executive to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices and communications by the Company to Executive may be given to Executive personally or may be mailed to Executive at Executive’s last known address, as reflected in the Company’s records.

 

(b)                                 Date of Delivery. Any notice so addressed shall be deemed to be given or received (i) if delivered by hand, on the date of such delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.

 

Section 19.                                   Section Headings.

 

The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision hereof.

 

Section 20.                                   Entire Agreement.

 

This Agreement, together with any exhibits attached hereto, constitutes the entire understanding and agreement of the parties hereto regarding the employment of Executive. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings, and agreements between the parties relating to the subject matter of this Agreement, including, without limitation, the Prior Agreement.

 

Section 21.                                   Survival of Operative Sections.

 

Upon any termination of Executive’s employment, the provisions of Section 8 through Section 22 of this Agreement (together with any related definitions set forth in Section 1 hereof) shall survive to the extent necessary to give effect to the provisions thereof.

 

Section 22.                                   Counterparts.

 

This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual signature or by signature delivered by facsimile or by e-mail as a portable document format (.pdf) file or image file attachment.

 

*                                         *                                         *

 

[Signatures to appear on the following page(s).]

 

12

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

 

	
 
    	
ADAPTHEALTH HOLDINGS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Luke McGee
    
	
 
    	
 
    	
Name:
    	
Luke McGee
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Joshua Parnes
    
	
 
    	
Joshua Parnes
    

 

[Signature Page to Employment Agreement]

 

 

Exhibit A

 

RESTRICTIVE COVENANT AGREEMENT

 

As a condition of my becoming employed by, or continuing employment with, AdaptHealth Holdings LLC, a Delaware limited liability company (the “Company”), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the following:

 

Section 1.                                          Confidential Information.

 

(a)                                 Company Group Information. I acknowledge that, during the period of my employment with the Company (the “Employment Period”), I will have access to information about the Company and its direct and indirect parents, subsidiaries and affiliates (collectively, the “Company Group”) and that my employment with the Company shall bring me into close contact with confidential and proprietary information of the Company Group. In recognition of the foregoing, I agree, at all times during the Employment Period and thereafter, to hold in confidence, and not to use, except for the benefit of the Company Group, or to disclose to any person, firm, corporation, or other entity without prior written authorization of the Company, any Confidential Information that I obtain or create. I further agree not to make copies of such Confidential Information except as authorized by the Company. I understand that “Confidential Information” means information that the Company Group has developed, acquired, created, compiled, discovered, or owned or will develop, acquire, create, compile, discover, or own, that has value in or to the business of the Company Group. I understand that Confidential Information includes, but is not limited to, any and all non-public information that relates to the actual or anticipated business and/or products, research, or development of the Company Group, or to the Company Group’s technical data, trade secrets, or know-how, including, but not limited to, research, product plans, or other information regarding the Company Group’s products or services and markets, customer lists, and customers (including, but not limited to, customers of the Company Group on whom I called or with whom I may become acquainted during the Employment Period), software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances, and other business information disclosed by the Company Group either directly or indirectly in writing, orally, or by drawings or inspection of premises, parts, equipment, or other Company Group property. Notwithstanding the foregoing, Confidential Information shall not include (i) any of the foregoing items that have become publicly and widely known through no unauthorized disclosure by me or others who were under confidentiality obligations as to the item or items involved or (ii) any information that I am required to disclose to, or by, any governmental or judicial authority; provided, however, that in such event I will give the Company prompt written notice thereof so that the Company Group may seek an appropriate protective order and/or waive in writing compliance with the confidentiality provisions of this Restrictive Covenant Agreement (this “Agreement”).

 

(b)                                 Former Employer Information. I represent that my performance of all of the terms of this Agreement as an employee of the Company has not breached and will not breach any agreement to keep in confidence proprietary information, knowledge, or data acquired by me in confidence or trust prior or subsequent to the commencement of my employment with the Company, and I will not disclose to any member of the Company Group, or induce any member of the Company Group to use, any developments, or confidential or proprietary information or material I may have obtained in connection with employment with any prior employer in violation

 

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of a confidentiality agreement, nondisclosure agreement, or similar agreement with such prior employer. During the Employment Period, I will not improperly make use of, or disclose, any developments, or confidential or proprietary information or material of any prior employer or other third party, nor will I bring onto the premises of the Company or use any unpublished documents or any property belonging to any prior employer or other third party, in violation of any lawful agreements with that prior employer or third party. I will use in the performance of my duties only information that is generally known and used by persons with training and experience comparable to my own, is common knowledge in the industry or otherwise legally in the public domain, or is otherwise provided or developed by the Company.

 

(c)                                  Third Party Information. I understand that the Company Group has received and in the future may receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company Group’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. In recognition of the foregoing, I agree, at all times during the Employment Period and thereafter, to hold in confidence and will not disclose to anyone (other than Company Group personnel who need to know such information in connection with their work for the Company Group), and not to use, except for the benefit of the Company Group, Third Party Information without the express prior written consent of an officer of the Company and otherwise treat Third Party Information as Confidential Information.

 

(d)                                 Whistleblower; Defend Trade Secrets Act Disclosure.

 

(i)                                     In addition, I understand that nothing in this Agreement shall be construed to prohibit me from (A) filing a charge or complaint with, participating in an investigation or proceeding conducted by, or reporting possible violations of law or regulation to any federal, state or local government agency, (B) truthfully responding to or complying with a subpoena, court order, or other legal process, or (C) exercising any rights I may have under applicable labor laws to engage in concerted activity with other employees; provided however, that I agree to forgo any monetary benefit from the filing of a charge or complaint with a government agency except pursuant to a whistleblower program or where my right to receive such a monetary benefit is otherwise not waivable by law.

 

(ii)                                  I understand that the Defend Trade Secrets Act provides that I may not be held criminally or civilly liable under any Federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a Federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In the event that I file a lawsuit for retaliation by any member of the Company Group for reporting a suspected violation of law, I may disclose the trade secret to my attorney and use the trade secret information in the court proceeding, if I file any document containing the trade secret under seal and do not disclose the trade secret, except pursuant to court order.

 

Section 2.                                          Inventions.

 

(a)                                 No Prior Developments. By signing below, I represent that there are no developments, inventions, concepts, know-how, original works of authorship, improvements,

 

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trade secrets, methodology, algorithms, software, processes, formulas, designs, drawings and other technological advancements and implementations that I can demonstrate were created or owned by me prior to the commencement of the Employment Period, which belong solely to me or belong to me jointly with another, that relate in any way to any of the actual or proposed businesses, products, or research and development of any member of the Company Group and which are not assigned to the Company hereunder.

 

(b)                                 Assignment of Inventions. Without additional compensation, I agree to assign, and hereby do assign, to the Company all rights, title and interest throughout the world in and to all Inventions (as defined below) which I may solely or jointly conceive, create, invent, develop, modify, compile or reduce to practice, at any time during any period during which I perform or performed services for the Company Group both before or after the date hereof (the “Assignment Period”), whether as an officer, employee, director, independent contractor, consultant, or agent, or in any other capacity, whether or not during regular working hours, provided they either (i) relate at the time of conception, development or reduction to practice to the business of any member of the Company Group, or the actual or anticipated research or development of any member of the Company Group; (ii) result from or relate to any work performed for any member of the Company Group; or (iii) are developed through the use of equipment, supplies, or facilities of any member of the Company Group, or any Confidential Information, or in consultation with personnel of any member of the Company Group (collectively referred to as “Company IP Rights”). I understand that “Inventions” means inventions, concepts, know-how, developments, original works of authorship, improvements, trade secrets, methodology, algorithms, software, processes, formulas, designs, drawings and other technological advancements and implementations. I agree that I will promptly make full written disclosure to the Company of any Company IP Rights I participate in conceiving, creating, inventing, developing, modifying, compiling or reducing to practice during the Assignment Period. I further acknowledge that, to the greatest extent permitted by applicable law, all Company IP Rights made by me (solely or jointly with others) within the scope of and during the Assignment Period are “works made for hire” for which I am, in part, compensated by my salary, unless regulated otherwise by law. If any Company IP Rights cannot be assigned, I hereby grant to the Company Group an exclusive, assignable, irrevocable, perpetual, worldwide, sublicenseable (through one or multiple tiers), royalty-free, unlimited license to use, make, modify, sell, offer for sale, reproduce, distribute, create derivative works of, publicly perform, publicly display and digitally perform and display such work in any media now known or hereafter known. Outside the scope of my service, whether during or after the Employment Period, I agree not to (i) modify, adapt, alter, translate, or create derivative works from any such work of authorship or (ii) merge any such work of authorship with other Company IP Rights. To the extent rights related to paternity, integrity, disclosure and withdrawal (collectively, “Moral Rights”) may not be assignable under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, I hereby irrevocably waive such Moral Rights and consent to any action of the Company Group that would violate such Moral Rights in the absence of such consent.

 

(c)                                  Maintenance of Records. I agree to keep and maintain adequate and current written records of all Company IP Rights made by me (solely or jointly with others) during the Assignment Period. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, and any other format. The records will be available to and remain the sole property of the Company Group at all times. I agree not to remove such records from the Company’s place

 

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of business except as expressly permitted by Company Group policy, which may, from time to time, be revised at the sole election of the Company Group for the purpose of furthering the business of the Company Group.

 

(d)                                 Intellectual Property Rights. I hereby agree to assist the Company, or its designee, at the Company’s expense, in every way to secure the rights of the Company Group in the Company IP Rights and any copyrights, patents, trademarks, service marks, database rights, domain names, mask work rights, moral rights, and other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments that the Company shall deem necessary in order to apply for, obtain, maintain, and transfer such rights and in order to assign and convey to the Company Group the sole and exclusive right, title, and interest in and to such Company IP Rights, and any intellectual property and other proprietary rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the Assignment Period until the expiration of the last such intellectual property right to expire in any country of the world; provided, however, that the Company shall reimburse me for my reasonable expenses incurred in connection with carrying out the foregoing obligation. If the Company is unable because of my mental or physical incapacity or unavailability for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Company IP Rights or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact to act for and in my behalf and stead to execute and file any such applications or records and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance, and transfer of letters patent or registrations thereon with the same legal force and effect as if originally executed by me. I hereby waive and irrevocably quitclaim to the Company any and all claims, of any nature whatsoever, that I now or hereafter have for past, present, or future infringement of any and all proprietary rights assigned to the Company.

 

(e)                                  State Non-assignable Invention Exemptions. Solely to the extent that I (i) was or am an employee of the Company and (ii) was or am based in California, Illinois, Washington, Kansas or Minnesota or otherwise entitled to the benefits of the state statutes of California, Illinois, Washington, Kansas or Minnesota during the Employment Period, then, to the extent the assignment of Company IP Rights to the Company in this Section 2 can be construed to cover inventions excluded under the appropriate state statutes (including California Labor Code Sec. 2870, Illinois Employee Patent Act, 765 ILCS 1060, Sec. 2, Revised Code of Washington Section 49.44.140(1), Kansas Statute K.S.A. §44-130, and Minn. Stat. §181.78, each incorporated herein by reference), this Section 2 shall not apply to such inventions.

 

Section 3.                                          Returning Company Group Documents.

 

I agree that, at the time of termination of my employment with the Company for any reason, I will deliver to the Company (and will not keep in my possession, recreate, or deliver to anyone else) any and all Confidential Information, Third Party Information and all other documents, materials, information, and property developed by me pursuant to my employment or otherwise belonging to the Company and, if so requested, will certify in writing that I have fully complied

 

A-4

 

with the foregoing obligation. I agree further that I will not copy, delete, or alter any information contained upon my Company computer or Company equipment before I return it to the Company. In addition, if I have used any personal computer, server, or e-mail system to receive, store, review, prepare or transmit any Company information, including but not limited to, Confidential Information, I agree to provide the Company with a computer-useable copy of all such Company information and then permanently delete and expunge such Company information from those systems; and I agree to provide the Company access to my system as reasonably requested to verify that the necessary copying and/or deletion is completed. I agree further that any property situated on the Company’s premises and owned by the Company (or any other member of the Company Group), including disks and other storage media, filing cabinets, and other work areas, is subject to inspection by personnel of any member of the Company Group at any time with or without notice.

 

Section 4.                                          Disclosure of Agreement.

 

As long as it remains in effect, I will disclose the existence of this Agreement to any prospective employer, partner, co-venturer, investor, or lender prior to entering into an employment, partnership, or other business relationship with such person or entity. I also consent to the notification of my prospective employer, partner, co-venturer, investor, or lender of my rights and obligations under this Agreement, by the Company providing a copy of this Agreement or otherwise.

 

Section 5.                                          Publicity.

 

I hereby consent to any and all uses and displays by the Company Group of my name, voice, likeness, image, appearance and biographical information in or in connection with any printed, electronic or digital materials, including, without limitation, any pictures, audio or video recordings, digital images, websites, television programs, advertising, sales or marketing brochures, printed materials and computer media, throughout the world and at any time during or after the Employment Period for all legitimate business purposes of the Company Group (the “Permitted Use”). I hereby forever release the Company Group and each of their respective current or former directors, officers, employees, shareholders, representatives and agents from any and all claims, actions, damages, losses, costs, expenses and liability of any kind arising under any legal or equitable theory whatsoever at any time during or after the Employment Period in connection with any Permitted Use.

 

Section 6.                                          Restrictions on Interfering.

 

(a)                                 Non-Competition. During the Restricted Period, I shall not, directly or indirectly, individually or on behalf of any person, company, enterprise, or entity, or as a sole proprietor, partner, shareholder, director, officer, principal, agent, or executive, or in any other capacity or relationship, engage in any Competitive Activities, within the United States or any other jurisdiction in which the Company Group is actively engaged in business.

 

(b)                                 Non-Interference. During the Restricted Period, I shall not, directly or indirectly for my own account or for the account of any other individual or entity, engage in Interfering Activities.

 

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(c)                                  Definitions. For purposes of this Agreement:

 

(i)                                     “Business Relation” shall mean any current or prospective client, customer, licensee, or other business relation of the Company Group, or any such relation that was a client, customer, licensee, supplier, or other business relation within the twelve (12) month period prior to the termination of the Employment Period, in each case, to whom I provided services, or with whom I transacted business, or whose identity became known to me in connection with my relationship with or employment by the Company.

 

(ii)                                  “Competitive Activities” shall mean the business of owning and operating a durable medical equipment business or any other business activity that is competitive with the then-current or demonstrably planned business activities of the Company Group.

 

(iii)                               “Interfering Activities” shall mean (A) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any Person employed by, or providing consulting services to, any member of the Company Group and who is or is likely to be in possession of Confidential Information to terminate such Person’s employment or services (or in the case of a consultant, materially reducing such services) with the Company Group; (B) hiring any individual who was employed by the Company Group within the six (6) month period prior to the date of such hiring; or (C) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any Business Relation to cease doing business with or reduce the amount of business conducted with any member of the Company Group, or in any way interfering with the relationship between any such Business Relation and any member of the Company Group.

 

(iv)                              “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust (charitable or non- charitable), unincorporated organization, or other form of business entity.

 

(v)                                 “Restricted Period” shall mean the period commencing on the date hereof and ending on the twenty-four (24) month anniversary of such date of termination.

 

(d)                                 Non-Disparagement. I agree that during the Employment Period, and at all times thereafter, I will not make any disparaging or defamatory comments regarding any member of the Company Group or its respective current or former directors, officers, employees or shareholders in any respect or make any comments concerning any aspect of my relationship with any member of the Company Group or any conduct or events which precipitated any termination of my employment from the Company. However, my obligations under this subsection (d) shall not apply to disclosures required by applicable law, regulation, or order of a court or governmental agency.

 

Section 7.                                          Reasonableness of Restrictions.

 

I acknowledge and recognize the highly competitive nature of the Company’s business, that access to Confidential Information renders me special and unique within the Company’s industry, and that I will have the opportunity to develop substantial relationships with existing and prospective clients, accounts, customers, consultants, contractors, investors, and strategic partners of the Company Group during the course of and as a result of my employment with the Company. In light of the foregoing, I recognize and acknowledge that the restrictions and limitations set forth in this Agreement are reasonable and valid in geographical and temporal scope and in all other

 

A-6

 

respects and are essential to protect the value of the business and assets of the Company Group. I acknowledge further that the restrictions and limitations set forth in this Agreement will not materially interfere with my ability to earn a living following the termination of the Employment Period and that my ability to earn a livelihood without violating such restrictions is a material condition to my employment with the Company.

 

Section 8.                                          Independence; Severability; Blue Pencil.

 

Each of the rights enumerated in this Agreement shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to the Company Group at law or in equity. If any of the provisions of this Agreement or any part of any of them is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of this Agreement, which shall be given full effect without regard to the invalid portions. If any of the covenants contained herein are held to be invalid or unenforceable because of the duration of such provisions or the area or scope covered thereby, I agree that the court making such determination shall have the power to reduce the duration, scope, and/or area of such provision to the maximum and/or broadest duration, scope, and/or area permissible by law, and in its reduced form said provision shall then be enforceable.

 

Section 9.                                          Injunctive Relief.

 

I expressly acknowledge that, because my services are personal and unique and because I will have access to Confidential Information, any breach or threatened breach of any of the terms and/or conditions set forth in this Agreement may result in substantial, continuing, and irreparable injury to the members of the Company Group for which monetary damages would not be an adequate remedy. Therefore, I hereby agree that, in addition to any other right or remedy that may be available to the Company in law or in equity, any member of the Company Group shall be entitled to injunctive relief, specific performance, or other equitable relief by a court of appropriate jurisdiction in the event of any breach or threatened breach of the terms of this Agreement without the necessity of proving irreparable harm or injury as a result of such breach or threatened breach or posting a bond and without liability should relief be denied, modified or vacated. Notwithstanding any other provision to the contrary, I acknowledge and agree that the Restricted Period shall be tolled during any period of violation of any of the covenants in Section 6 hereof and during any other period required for litigation during which the Company or any other member of the Company Group seeks to enforce such covenants against me if it is ultimately determined that I was in breach of such covenants.

 

Section 10.                                   Cooperation.

 

I agree that, following any termination of my employment, I will continue to provide reasonable cooperation to the Company and/or any other member of the Company Group and its or their respective counsel in connection with any investigation, administrative proceeding, or litigation relating to any matter that occurred during the Employment Period in which I was involved or of which I have knowledge. As a condition of such cooperation, the Company shall reimburse me for reasonable out-of-pocket expenses incurred at the request of the Company with respect to my compliance with this Section. I also agree that, in the event that I am subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony or

 

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provide documents (in a deposition, court proceeding, or otherwise) that in any way relates to my employment by the Company and/or any other member of the Company Group, I will give prompt notice of such request to the Company and will make no disclosure until the Company and/or the other member of the Company Group has had a reasonable opportunity to contest the right of the requesting person or entity to such disclosure.

 

Section 11.                                   General Provisions.

 

(a)                                 Governing Law and Jurisdiction. EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THE VALIDITY, INTERPRETATION, CONSTRUCTION, AND PERFORMANCE OF THIS AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS RULES. FURTHER, I HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, AND WAIVE ANY RIGHT TO TRIAL BY JURY, IN CONNECTION WITH ANY DISPUTE ARISING UNDER OR CONCERNING THIS AGREEMENT.

 

(b)                                 Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and merges all prior discussions between us. No modification or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, obligations, rights, or compensation will not affect the validity or scope of this Agreement.

 

(c)                                  No Right of Continued Employment. I acknowledge and agree that nothing contained herein shall be construed as granting me any right to continued employment by the Company, and the right of the Company to terminate my employment at any time and for any reason, with or without cause, is specifically reserved.

 

(d)                                 Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators, and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. I expressly acknowledge and agree that this Agreement may be assigned by the Company without my consent to any other member of the Company Group as well as any purchaser of all or substantially all of the assets or stock of the Company or of any business or division of the Company for which I provide services, whether by purchase, merger, or other similar corporate transaction.

 

(e)                                  Survival. The provisions of this Agreement shall survive the termination of my employment with the Company and/or the assignment of this Agreement by the Company to any successor in interest or other assignee.

 

*                                         *                                         *

 

[Signature to appear on the following page.]

 

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I, Josh Parnes, have executed this Restrictive Covenant Agreement on the date set forth below:

 

	
Date: March 20, 2019
    	
/s/ Josh Parnes
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Josh Parnes
    
	
 
    	
(Type/Print Name)
    

 

[Signature Page to Josh Parnes Restrictive Covenant Agreement]

 

 

Exhibit B

 

RELEASE OF CLAIMS

 

As used in this Release of Claims (this “Release”), the term “claims” will include all claims, covenants, warranties, promises, undertakings, actions, suits, causes of action, obligations, debts, accounts, attorneys’ fees, judgments, losses, and liabilities, of whatsoever kind or nature, in law, in equity, or otherwise.

 

For and in consideration of the Severance Benefits (as defined in my Employment Agreement, dated March 20, 2019, with AdaptHealth Holdings LLC, a Delaware limited liability company (such entity, the “Company” and such agreement, my “Employment Agreement”)), and other good and valuable consideration, I, Josh Parnes, for and on behalf of myself and my heirs, administrators, executors, and assigns, effective as of the date on which this release becomes effective pursuant to its terms, do fully and forever release, remise, and discharge the Company and each of its direct and indirect subsidiaries and affiliates, and their respective successors and assigns, together with their respective current and former officers, directors, partners, shareholders, employees, and agents (collectively, the “Group”), from any and all claims whatsoever up to the date hereof that I had, may have had, or now have against the Group, whether known or unknown, for or by reason of any matter, cause, or thing whatsoever, including any claim arising out of or attributable to my employment or the termination of my employment with the Company, whether for tort, breach of express or implied employment contract, intentional infliction of emotional distress, wrongful termination, unjust dismissal, defamation, libel, or slander, or under any federal, state, or local law dealing with discrimination based on age, race, sex, national origin, handicap, religion, disability, or sexual orientation. The release of claims in this Release includes, but is not limited to, all claims arising under the Age Discrimination in Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Civil Rights Act of 1991, the Family and Medical Leave Act of 1993, the Worker Adjustment and Retraining Notification Act of 1988 and the Equal Pay Act of 1963, each as may be amended from time to time, and all other federal, state, and local laws, the common law, and any other purported restriction on an employer’s right to terminate the employment of employees. The release contained herein is intended to be a general release of any and all claims to the fullest extent permissible by law.

 

By executing this Release, I specifically release all claims relating to my employment and its termination under ADEA, a United States federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefit plans.

 

Notwithstanding any provision of this Release to the contrary, by executing this Release, I am not releasing (i) any claims relating to my rights under Section 8 of my Employment Agreement, (ii) any claims that cannot be waived by law, (iii) my rights with respect to any equity securities that I own in the Company, or (iv) my right of indemnification as provided by, and in accordance with the terms of, the Company’s by-laws or a Company insurance policy providing such coverage, as any of such may be amended from time to time.

 

I expressly acknowledge and agree that I—

 

·                                          Am able to read the language, and understand the meaning and effect, of this Release;

 

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·                                          Have no physical or mental impairment of any kind that has interfered with my ability to read and understand the meaning of this Release or its terms, and that I am not acting under the influence of any medication, drug, or chemical of any type in entering into this Release;

 

·                                          Am specifically agreeing to the terms of the release contained in this Release because the Company has agreed to pay me the Severance Benefits in consideration for my agreement to accept it in full settlement of all possible claims I might have or ever have had, and because of my execution of this Release;

 

·                                          Acknowledge that, but for my execution of this Release, I would not be entitled to the Severance Benefits;

 

·                                          Understand that, by entering into this Release, I do not waive rights or claims under ADEA that may arise after the date I execute this Release;

 

·                                          Had or could have had [twenty-one (21)][forty-five (45)](1) calendar days from the date of my termination of employment (the “Release Expiration Date”) in which to review and consider this Release, and that if I execute this Release prior to the Release Expiration Date, I have voluntarily and knowingly waived the remainder of the review period;

 

·                                          Have not relied upon any representation or statement not set forth in this Release or my Employment Agreement made by the Company or any of its representatives;

 

·                                          Was advised to consult with my attorney regarding the terms and effect of this Release; and

 

·                                          Have signed this Release knowingly and voluntarily.

 

I represent and warrant that I have not previously filed, and to the maximum extent permitted by law agree that I will not file, a complaint, charge, or lawsuit against any member of the Group regarding any of the claims released herein. If, notwithstanding this representation and warranty, I have filed or file such a complaint, charge, or lawsuit, I agree that I shall cause such complaint, charge, or lawsuit to be dismissed with prejudice and shall pay any and all costs required in obtaining dismissal of such complaint, charge, or lawsuit, including without limitation the attorneys’ fees of any member of the Group against whom I have filed such a complaint, charge, or lawsuit. Notwithstanding anything to the contrary, nothing herein shall prevent or restrict me from (i) filing a charge or complaint with, participating in an investigation or proceeding conducted by, or reporting possible violations of law or regulation to any federal, state or local government agency; (ii) truthfully responding to or complying with a subpoena, court order, or other legal process; or (iii) exercising any rights I may have under applicable labor laws to engage in concerted activity with other employees; provided however, that I hereby forgo any monetary benefit from the filing of a charge or complaint with a government agency except

 

(1)         To be selected based on whether applicable termination was “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967).

 

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pursuant to a whistleblower program or where my right to receive such a monetary benefit is otherwise not waivable by law.

 

I hereby agree to waive any and all claims to re-employment with the Company or any other member of the Group and affirmatively agree not to seek further employment with the Company or any other member of the Group.

 

Notwithstanding anything contained herein to the contrary, this Release will not become effective or enforceable prior to the expiration of the period of seven (7) calendar days immediately following the date of its execution by me (the “Revocation Period”), during which time I may revoke my acceptance of this Release by notifying the Company and the Board of Directors of the Company, in writing, delivered to the Company at its principal executive office, marked for the attention of its General Counsel. To be effective, such revocation must be received by the Company no later than 11:59 p.m. on the seventh (7th) calendar day following the execution of this Release. Provided that the Release is executed and I do not revoke it during the Revocation Period, the eighth (8th) calendar day following the date on which this Release is executed shall be its effective date. I acknowledge and agree that if I revoke this Release during the Revocation Period, this Release will be null and void and of no effect, and neither the Company nor any other member of the Group will have any obligations to pay me the Severance Benefits.

 

The provisions of this Release shall be binding upon my heirs, executors, administrators, legal personal representatives, and assigns. If any provision of this Release shall be held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force or effect. The illegality or unenforceability of such provision, however, shall have no effect upon and shall not impair the enforceability of any other provision of this Release.

 

EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THE VALIDITY, INTERPRETATION, CONSTRUCTION, AND PERFORMANCE OF THIS RELEASE IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS RULES. ANY DISPUTE OR CLAIM ARISING OUT OF OR RELATING TO THIS RELEASE OR CLAIM OF BREACH HEREOF SHALL BE BROUGHT EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT FEDERAL JURISDICTION EXISTS, AND IN ANY COURT SITTING IN MANHATTAN, NEW YORK, BUT ONLY IN THE EVENT FEDERAL JURISDICTION DOES NOT EXIST, AND ANY APPLICABLE APPELLATE COURTS. BY EXECUTION OF THIS RELEASE, I CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS, AND WAIVE ANY RIGHT TO CHALLENGE JURISDICTION OR VENUE IN SUCH COURT WITH REGARD TO ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS RELEASE. FURTHER, I HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS RELEASE.

 

B-3

 

Capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in my Employment Agreement.

 

*                                         *                                         *

 

I, Josh Parnes, have executed this Release of Claims on the respective date set forth below:

 

 

	
 
    	
 
    
	
 
    	
Josh Parnes
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date:
    	
[To Be Executed Following
    
	
 
    	
 
    	
Termination of Employment]
    

 

B-4Exhibit 10.11

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (this “Agreement”) dated as of November 10, 2014, by and between QMES, LLC (“QMES” or the “Company”) and Gregg Holst (the ‘‘Key Executive”).

 

The Company desires to retain Key Executive and Key Executive desires to be employed by the Company, upon the terms and conditions provided herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and other good and valuable consideration, intending to be legally bound, the parties to this Agreement hereby agree as follows:

 

1.             Assignment and Duties. The Company shall employ Key Executive and Key Executive hereby accepts such employment as Chief Financial Officer during the term of this Agreement set forth in Section 2. Key Executive shall assume full responsibilities as provided in the position job description, and assume such other responsibilities and duties, consistent with his position and expertise, as may from time to time be reasonably prescribed by the Chairman and Chief Executive Officer or the Board of Directors (the “Board”) of QMES and the Company. Key Executive shall report to the Chief Executive Officer of the Company. Key Executive shall devote substantially all of his business time, energy, skill and best efforts to the business and affairs of the Company and its subsidiaries. Key Executive acknowledges and agrees that he shall observe and comply with all of the Company’s policies.

 

2.             Term. The term of this Agreement (the “Term”) shall commence on the date hereof and shall continue for a period of one year, and shall renew automatically for subsequent periods of one year, until terminated prior to the end of the initial term or any subsequent term by either the Company or Key Executive pursuant to the provisions of Section 4.

 

3.             Compensation and Benefits.

 

3.1.         Salary. The Company shall pay to Key Executive as his compensation for services rendered hereunder a base salary (the “Salary”) of two hundred and fifty thousand dollars ($250,000) per year for the first year of service under this Agreement. Payments shall be payable to Key Executive in accordance with the Company’s normal payroll practices for executive officers. The Company shall deduct or cause to be deducted from the Salary and all other compensation payable hereunder all taxes and amounts required by law to be withheld. The Salary shall be reviewed on each anniversary of Key Executive’s date of hire in accordance with the Company’s normal compensation practices for executive officers.

 

3.2.         Benefits. During the Term, and subject to the other provisions of the Agreement, Key Executive shall be entitled to participate in any benefit plan of the Company generally available to executive officers to the extent Key Executive is eligible under the general provisions therein (the “Benefits”). Key Executive shall be entitled to four (4) weeks paid time off each year during the first 5 years of the Term and five (5) weeks thereafter. Paid time off not utilized in the respective year may be utilized in the following year, however, such carryover is limited by the Company’s paid time off policy.

 

 

3.3.         Bonus. The Company has established a bonus program for the Company’s executive officers, with the criteria and procedures relating to the bonus program to be determined by the Board from time to time. The Key Executive shall have the right to earn and be paid an annual cash bonus (the “Bonus”) of up to thirty percent (30%) of his Salary as in effect at the beginning of each fiscal year. The payment of the Bonus will be conditioned upon (a) Key Executive’s successful attainment of agreed upon non-financial goals (the “Executive Goal Bonus Portion”) and (b) the Company’s attainment of its annual consolidated financial targets (the “Company Target Bonus Portion”). The Executive Goal Bonus Portion will be earned and paid quarterly while the Company Target Bonus Portion will be paid annually within four (4) months of the end of the respective fiscal year. The initial year under this Agreement will be prorated from the start date. The Company intends to review the bonus program and its criteria and procedures on at least an annual basis.

 

3.4.         Out of Pocket Expenses. Key Executive shall be reimbursed by the Company for all reasonable and necessary expenses incurred by Key Executive on behalf of the Company. Key Executive shall submit such expenses and appropriate documentation to the Company for payment in accordance with the Company’s policies and procedures.

 

3.5.         Equity Ownership. As additional compensation, the Company will provide Key Executive with such number of Common Units of the Company, granted effective as of the date of this Agreement, pending approval of the Company’s Board of Directors, representing one (1.00%) percent of the total fully diluted Common Units of the Company as of the date of the grant. Such grant shall vest in four (4) equal annual increments of 25% each of the grant of the Common Units on the first four (4) anniversary dates immediately following the date of this Agreement; provided, however, (a) all Common Units shall vest immediately upon a Capital Event or the sale of a controlling interest of the equity of the Company, a merger in which the Company does not maintain a controlling interest, an IPO (Initial Public Offering), a sale of a majority equity interest to a SPAC (a special purpose acquisition entity) or the conversion to a different business entity in anticipation of any of the foregoing and (b) in the event Key Executive is terminated by the Company without Cause, as provided in Section 4.2.5 below, within the first twelve (12) months from the effective date of this Agreement, 25% of the grant of Common Units shall immediately vest. Common Units granted hereunder may not be sold, assigned, pledged or transferred other than upon the death of the Key Executive by will or by the laws of descent and distribution or as otherwise set forth in the Company’s Limited Liability Company Operating Agreement as amended from time to time; except that Key Executive may transfer or assign all or any portion of the Common Units granted to him hereunder to an entity in which he has and retains a controlling interest; provided that all terms and conditions of this Agreement that apply to the Key Executive shall continue to be effective and apply to the entity which becomes owner of the Common Units as if Key Executive retained ownership in his own name of the Common Units. For the purposes of this Section 3.5. Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in the QMES Limited Liability Operating Agreement dated July 1, 2013.

 

All vested portions of these Common Units are owned by the Key Executive upon termination, except for Termination for Cause as defined in 4.2.3 herein. In addition, if at any time within one year after the termination of the Key Executive’s employment, the Key Executive engages in any activity in competition with any activity of the Company, or inimical,

 

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contrary or harmful to the interests of the Company, including, but not limited to: (1) conduct related to the Key Executive’s employment for which either criminal or civil penalties against the Key Executive may be sought, (2) violation of Company policies, including, without limitation, insider trading rules, (3) accepting employment with or serving as a consultant, advisor or in any capacity to an employer that is in competition with or acting against the interest of the Company, including employing or recruiting any present, former or future employee of the Company, (4) disclosing or misusing any confidential information or material concerning the Company, (5) participating in a hostile takeover attempt with respect to the Company, then all Common Units hereunder held by the Key Executive shall terminate effective as of the date on which Key Executive enters into such activity.

 

3.6.         Entire Compensation. The Salary, Benefits, Bonus, out of pocket reimbursed expenses and the Executive Ownership shall be the total consideration for the services to be rendered by Key Executive to the Company hereunder.

 

4.             Termination.

 

4.1.         Notice of Termination. Any termination by the Company or by Key Executive other than due to Key Executive’s death shall be communicated by written Notice of Termination to the other party. As used in this Agreement, (a) “Notice of Termination” means a written notice specifying the termination provision in this Agreement relied upon and (b) “Date of Termination” means the date of death or the date specified in the Notice of Termination, as the case may be.

 

4.2.         Grounds for Termination.

 

4.2.1       Termination upon Death. Key Executive’s relationship with the Company and all of his rights to Salary and Benefits hereunder shall automatically terminate upon his death, except that his heirs, personal representatives or estate (as the case may be) shall be entitled to (i) any unpaid portion of his Salary and Benefits up to the Date of Termination and (ii) a prorated portion of his Bonus determined pursuant to Section 4.4.

 

4.2.2       Termination upon Disability. If Key Executive becomes disabled, Key Executive shall continue to receive his Salary and Benefits in accordance with Sections 3.1 and 3.2 for a period of six (6) months following the Onset of Disability (as defined in this Section 4.2.2). Any amounts due to Key Executive will be reduced, dollar-for-dollar, for any amounts received by Key Executive under any disability insurance policy or plan provided to Key Executive by the Company. “Onset of Disability” means the first day on which Key Executive shall be unable to attend to the regular affairs of the Company on a full time basis by reason of physical or mental incapacity, sickness or infirmity. If Key Executive’s disability continues for more than six (6) months after Onset of Disability or for periods aggregating more than six (6) months during any twelve (12) month period, then the Company shall have the right to terminate this Employment Agreement immediately upon delivery by the Company to Key Executive of a Notice of Termination and all of Key Executive’s rights to Salary and Benefits hereunder shall simultaneously terminate. In the event of a termination pursuant to this Section 4.2.2, Key Executive shall also be entitled to a prorated portion of his Bonus determined pursuant to Section 4.4.

 

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4.2.3       Termination for Cause. At any time during the Term, the Company may terminate Key Executive’s employment for Cause (as defined in this Section 4.2.3), effective immediately upon delivery of a Notice of Termination. For purposes of this Agreement, “Cause” shall mean: (a) Key Executive’s willful misfeasance, willful misconduct, willful waste of material corporate assets, gross negligence or willful failure to substantially perform reasonably assigned duties; (b) breach of any of the Covenants (as defined in Section 5.3) or any other material breach of this Agreement; (c) commission of Key Executive of a felony or any crime involving fraud, larceny, embezzlement or moral turpitude; or (d) abuse of alcohol or drugs by Key Executive which materially interferes with the performance of his duties under this Agreement. On termination of this Agreement pursuant to this Section 4.2.3., all of Key Executive’s rights to Compensation and Benefits shall automatically terminate as of the Date of Termination except with respect to any earned but unpaid portion of his Salary to the Date of Termination.

 

4.2.4       Elective Termination by Key Executive Without Good Reason. Key Executive’s employment with the Company and all of his rights to Compensation and Benefits hereunder (except as provided in Section 4.5) shall automatically terminate on the day Notice of Termination without Good Reason is given by Key Executive to the Company. Except for the payment of any earned but unpaid portion of Key Executive’s Salary and Benefits up to the Date of Termination, the Company shall have no further obligation or liability to Key Executive under this Agreement upon a termination of employment by Key Executive without Good Reason.

 

4.2.5       Termination by the Company Without Cause. At any time during the Term, the Company may terminate Key Executive’s employment hereunder without Cause, effective immediately upon delivery by the Company to Key Executive of a Notice of Termination. Upon such termination, Key Executive shall continue to receive all of his Salary and Benefits for six (6) months following the effective date of the Notice of Termination and any unreimbursed out of pocket expenses, paid in accordance with Company’s normal payroll policies. The effective date shall not be earlier than the date of delivery of said notice. Compensation under this Section 4.2.5 and Section 4.4 will be the sole and exclusive compensation in the event Key Executive is terminated without Cause. Receipt by Executive of any compensation under this Section 4.2.5 shall be conditioned upon (i) Executive’s delivery to the Company of a general release for the benefit of the Company and its officers, directors and agents reasonable and customary for situations involving the termination of employment and (ii) Executive’s fulfillment and non-contravention of his obligations and covenants set forth in Section 5 hereto. Termination at the end of the employment contract year entitles Key Executive to all of his Salary and Benefits for six months.

 

4.2.6       Termination by Key Executive for Good Reason. Key Executive may terminate Key Executive’s employment hereunder for Good Reason (as defined in this Section 4.2.6) upon delivery of a Notice of Termination to the Company in accordance with this Section 4.2.6. For purposes of this Agreement, “Good Reason” shall mean the occurrence at any time during the Term, without Key Executive’s consent, of any of the following events: (a) a material breach of the Company’s obligations hereunder; (b) a material diminution in the nature or scope of the authority, powers, functions, duties or responsibilities of Key Executive with the Company; (c) a reduction in or failure to pay Key Executive his Salary or any amounts otherwise vested and/or due under the Company’s employee benefit plans or employee benefit programs; (d) a reduction in the Bonus percentage for which Key Executive is eligible hereunder; or (e) the

 

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Company requires Key Executive to be based at any office or location that is more than fifty (50) miles from the Company’s offices located in Oaks, Pennsylvania. A Notice of Termination for Good Reason must be given no later than on the thirtieth (30th day following the effective date of the event giving rise to the Good Reason, provided that such termination shall not be effective unless the Company has not cured the cause for such Good Reason on or before the thirtieth (30th day following its receipt of such Notice. Upon such termination, Key Executive shall continue to receive all of his Salary and Benefits for six (6) months following the effective date of the Notice of Termination and any unreimbursed out of pocket expenses, paid in accordance with Company’s normal payroll policies. Compensation under this Section 4.2.6 and Section 4.4 will be the sole and exclusive compensation in the event Key Executive is terminated without Cause. Receipt by Executive of any compensation under this Section 4.2.5 shall be conditioned upon (i) Executive’s delivery to the Company of a general release for the benefit of the Company and its officers, directors and agents reasonable and customary for situations involving the termination of employment and (ii) Executive’s fulfillment and non-contravention of his obligations and covenants set forth in Section 5 hereto.

 

4.3.         Procedure Upon Termination. On termination of Agreement regardless of the reason, Key Executive (or his heirs, representatives or estate as the case may be) shall promptly return to the Company all documents (including copies) and other property of the Company, including without limitation customer lists, manuals, letters, materials, reports and records in Key Executive’s possession or control no matter from whom or in what manner acquired.

 

4.4.         Bonus Payable Upon Certain Terminations. If Key Executive’s employment is terminated pursuant to Section 4.2.1, 4.2.2, 4.2.5 or 4.2.6 with a minimum of six months service in a given calendar year, Key Executive (or his heirs, representatives or estate, as the case may be) shall be eligible to receive a prorated portion of the Company Target Bonus Portion which would otherwise be payable to Key Executive based on the Company’s attainment of its annual financial targets for the fiscal year in which the employment of Key Executive terminates which shall be payable within four (4) months following the end of the fiscal year in which the employment of Key Executive terminates. Key Executive shall not be entitled to receive (a) any Employee Goal Bonus Portion for any quarter which is not completed prior to the termination of Key Executive’s employment or (b) any Bonus for any fiscal year of the Company following the fiscal year in which the employment of Key Executive terminates.

 

4.5.         Certain Rights. Nothing in this Section 4 is intended to preclude Key Executive from receiving: (i) any vested or accrued benefits under any Benefits which are to be continued or paid after the Date of Termination in accordance with the terms of the corresponding plans for such Benefits; and (ii) any indemnification provided to Key Executive by law or by the Company’s organizational documents in Key Executive’s capacity as an officer of the Company to the extent Key Executive is or was otherwise entitled to receive such indemnification under law or the Company’s organizational documents.

 

5.             Covenants

 

5.1.         Nondisclosure. At all times during and after the Term, Key Executive shall keep confidential and shall not, except with the Board’s express prior written consent, or except in

 

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the proper course of Key Executive’s employment with the Company, directly or indirectly, communicate, disclose, divulge, publish or otherwise express to any Person (as hereinafter defined), or use for Key Executive’s own benefit or the benefit of any Person, any trade secrets, confidential or proprietary knowledge or information, no matter when or how acquired, concerning the conduct and details of the Company Group’s businesses, including without limitation names of customers, service providers, suppliers, marketing methods, trade secrets, policies, written memoranda or Company Group operation manuals or other similar documents, as well as prospects and financial condition of the Company Group. For purposes of this section, Confidential Information shall not include any information which is now known by or readily available to the general public or which becomes known or readily available to the general public other than as a result of any improper act or omission by Key Executive. For purposes of this Agreement, the term “Person” means a natural person, corporation, partnership, limited liability company, trust, estate, joint venture, sole proprietorship, government (and any branch or subdivision thereof), governmental agency, association, cooperative or other entity, and the term “Company Group” shall be defined as the Company and all other entities controlling, controlled by or under common control with the Company.

 

5.2.         Proprietary Information/Work Product. All work product produced by Key Executive during the term of this Agreement shall be the sole property of the Company and shall be deemed to be Confidential Information as defined in Section 5.1 hereof. Key Executive acknowledges that all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether able to receive intellectual property protection or not), which relate to the Company Group’s actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Key Executive while employed by the Company Group’s (“Work Product”) belong to the Company or other relevant Company Group entity. Key Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Term) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).

 

5.3.         Noncompetition and Nonsolicitation. Key Executive acknowledges that: (a) the Company businesses (collectively, the “Company Group’s Businesses”) involve providing durable medical equipment to patient homes and health care institutions and related services (b) the Company Group’s Businesses are highly competitive and face competition from other similar durable medical equipment companies, and (c) the Company Group makes substantial and continuous expenditures of time and money to develop, market and maintain the Company Group’s Businesses. Accordingly, during the period of Key Executive’s employment with the Company and for the Covenant Period (as defined in Section 5.3.4 hereof) Key Executive shall not, except with the Company’s express prior written consent (which consent must be authorized by the Board), directly or indirectly, in any capacity, for Key Executive’s benefit or the benefit of any Person:

 

5.3.1       Solicit any Person who is on the Date of Termination or during the Covenant Period an employee of or consultant to the Company Group in any manner which interferes or might interfere with such Person’s relationship with the Company Group or in an effort to obtain such Person as an employee, consultant, agent or similar relationship of any Person

 

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or hire any Person who is on the Date of Termination or during the Covenant Period an employee of the Company Group.

 

5.3.2       Solicit, divert, or accept business from any person who during the Term or the Covenant Period is a customer, supplier, consultant, salesman, agent or representative of the Company Group (a) in any manner which interferes or might interfere with such Person’s relationship with the Company Group (including, without limitation, making any negative statements about the Company Group or its subsidiaries), or (b) in an effort to obtain such Person as a customer, supplier, consultant, salesman, agent, or representative of any Person which conducts a business in competition with, or similar to, all or any material part of the Company Group’s Businesses; or

 

5.3.3       Anywhere in the United States, establish, engage, own, manage, operate, join or control, or participate in the establishment, ownership, management, operation or control of, or be a director, officer, employee, salesman, agent or representative of, or be a consultant to, any Person which conducts a business in competition with, or similar to, all or any material part of the Company Group’s Businesses as such businesses exist now or during such period; provided, however, that nothing in this Section 5.3.3 shall prevent Key Executive from owning not more than five percent of the outstanding securities of any Person whose securities are listed on the New York Stock Exchange or the American Stock Exchange or are quoted on NASDAQ.

 

5.3.4       The “Covenant Period” means a period of twelve (12) months after the termination of Key Executive’s employment with the Company regardless of the reason for such termination.

 

5.4.         Non-Disparagement. Following the date hereof and regardless of any dispute that may arise in the future, the Employee will not, and will use his best efforts to cause his business associates to not, disparage, criticize or make statements to the detriment of the Company or any of its affiliates; and the Company will not, and will use its best efforts to cause its affiliates to not, disparage, criticize or make statements to the detriment of the Employee.

 

5.5.         Equitable Relief. Key Executive acknowledges that any breach by his of any of the covenants and agreements set forth in this Section 5 (collectively, the “Covenants”) will result in irreparable injury to the Company for which monetary damages could not adequately compensate the Company. Therefore, in the event of any such breach, the Company shall be entitled, in addition to all other rights and remedies which the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restraining Key Executive and/or all other Persons involved therein from continuing such breach. The existence of any claim or cause of action which Key Executive or any such other Person may have against the Company shall not constitute a defense or bar to the enforcement of any of the Covenants. If the Company is obliged to resort to litigation to enforce any of the Covenants which has a fixed term, then such term shall be extended for a period of time equal to the period during which a material breach of such covenant was occurring, beginning on the date of a final court order (without further right of appeal) holding that such a material breach occurred or, if later, the last day of the original fixed term of such Covenant.

 

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5.6.         Consideration. Key Executive expressly acknowledges and agrees that the Covenants are (a) the result of arm’s length negotiations between the parties, and without Key Executive’s agreement to be bound by the Covenants, the Company would not have entered into this Agreement, (b) are reasonable in scope and duration and (c) are necessary to protect the legitimate business interests of the Company and that the level of Salary and Benefits provided to Key Executive hereunder includes good and adequate consideration for the Covenants. Key Executive further acknowledges and agrees that the Company’s business is intended to be national in scope. Key Executive hereby represents and warrants that Key Executive has a broad range of skills and abilities, and that enforcement by the Company of its rights under this Section 5 shall not prevent Key Executive from obtaining suitable employment subsequent to the termination of his employment with the Company.

 

5.7.         Scope. If any portion of any Covenant or its application is construed to be invalid, illegal or unenforceable, then the other portions and their application shall not be affected thereby and shall be enforceable with regard thereto. If any of the Covenants is determined to be unenforceable because of its scope, duration, geographical area or similar factor, then the court making such determination shall have the power to reduce or limit such scope, duration, area or other factor, and such Covenant shall then be enforceable in its reduced or limited form.

 

6.             Miscellaneous.

 

6.1.         Notice . All notices, requests, demands. consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (l) if and when delivered personally, (2) three days after mailing by first class certified mail, return receipt requested, postage prepaid, or (3) one day after being sent by a nationally recognized overnight courier service, postage or delivery charges prepaid, to the parties at their respective addresses set forth on the last page of this Agreement or to such other addresses of which the parties may give notice in accordance with this Section 7.1.

 

6.2.         Entire Understanding; Modification. This Agreement and sets forth the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous, ·written, oral, expressed or implied, communications, agreements and understandings with respect to the subject matter hereof. This Agreement shall not be amended, modified, supplemented or terminated except in writing signed by both parties. No action taken by the Company hereunder, including without limitation, any waiver, consent or approval, shall be effective unless authorized by the Company’s Board.

 

6.3.         Parties in Interest. This Agreement shall inure to the benefit of, bind and be enforceable by Key Executive and his heirs, personal representatives, estate and beneficiaries, and the Company and its successors and assigns. This Agreement is a personal employment contract between Key Executive and the Company, for Key Executive’s personal services, and Key Executive’s rights and duties hereunder shall not be assignable or delegable by Key Executive. The Company may assign its rights and duties hereunder provided that the assignee is the successor, by operation of law or otherwise, to any or all of the Company’s businesses, and the nature of Key Executive’s duties do not change in any material respect.

 

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6.4.         Severability. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, then the remaining provision hereof shall not be affected thereby and shall be enforceable without regard thereto.

 

6.5.         Counterparts. This Agreement may be fully executed in any number of counterparts, each of which when so executed and delivered shall be an original hereof, and it shall not be necessary in making proof of this Agreement to produce or account for more than one counterpart hereof.

 

6.6.         Section Headings; References. Section and subsection headings in this Agreement are inserted for convenience and reference only, and shat! neither constitute a part of this Agreement nor affect its construction, interpretation, meaning or effect. All words used in this Agreement shall be construed to be of such number and gender as the context requires or permits.

 

6.7.         Waivers. Neither the failure nor delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall the single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or any other right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

6.8.         Controlling Law. This Agreement is made under, and shall be governed by, construed and enforced in accordance with, the substantive laws of the Commonwealth of Pennsylvania applicable to agreements to be performed entirely therein without giving effect to principles of conflicts of laws.

 

6.9.         EXCLUSIVE JURISDICTION. IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES HERETO, KEY EXECUTIVE AND THE COMPANY IRREVOCABLY CONSENT AND AGREE TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE COMMONWEALTH OF PENNSYLVANJA; AND SERVICE OF PROCESS BY HAND DELIVERY OR BY CERTIFIED MAIL, TO THE ADDRESSES SET FORTH ABOVE FOR EACH PARTY.

 

6.10.       Survival. Sections 4, 5, 6 and 7 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Term.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above written.

 

	
QMES, LLC
    	
 
    	
 
    
	
122 Mill Road
    	
 
    	
 
    
	
Phoenixville, PA 19460
    	
 
    	
Attest:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Luke McGee
    	
 
    	
/s/ Steven Himmel
    
	
 
    	
Luke McGee, Chairman and Chief   Executive Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Gregg Holst
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Gregg Holst
    	
 
    	
/s/ Steven Himmel
    
	
 
    	
 
    	
 
    	
Witness
    
					

 

Employment Agreement Signature Page

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