AdaptHealth Corp. appointed new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


Pursuant to the Merger Agreement, the Company agreed to increase the size of its Board of Directors (the "Board") by two members and to appoint to the Board Stephen Griggs and one individual designated by Peloton Equity AeroCare SPV I, L.P. and SkyKnight Aero Holdings, LLC. Effective as of February 2, 2021, the Board voted to increase the size of the Board by two members and appointed (i) Mr. Griggs to the Board as a Class I director with a term expiring at the Company's 2023 annual meeting of stockholders and (ii) Theodore Lundberg as a Class II director with a term expiring at the Company's 2021 annual meeting of stockholders, to fill the newly-created vacancies. Mr. Lundberg will receive the same compensation opportunities as the Company's other non-employee directors.


Effective February 2, 2021, the Company hired and appointed Mr. Griggs, age 63, as the Company's Co-Chief Executive Officer ("Co-CEO"), and changed the title of Luke McGee, the Company's Chief Executive Officer to the Company's Co-Chief Executive Officer. On January 28, 2021, in recognition of Mr. McGee's significant contributions and efforts in connection with the Acquisition, the Compensation Committee of the Board approved a cash transaction bonus of $2 million to Mr. McGee, subject to the consummation of, and payable on the first regularly scheduled payroll date following, the closing of the Acquisition.


There were no arrangements or understandings between Mr. Griggs and any other person pursuant to which Mr. Griggs was selected as an officer. Mr. Griggs has no family relationships subject to disclosure under Item 401(d) of Regulation S-K or any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.


Mr. Griggs has served as the President and Chief Executive Officer of AeroCare, a leading national technology-enabled respiratory and home medical equipment ("HME") distribution platform in the United States, since November 2002. Mr. Griggs holds a B.S.B.A. in Business Management from East Tennessee State University and B.S.B.A. in Accounting from the University of Central Florida.


On February 2, 2021, the Company entered into an employment agreement with Mr. Griggs (the "Employment Agreement") that will govern the terms of his employment as the Company's Co-CEO. Pursuant to the terms of the Employment Agreement, Mr. Griggs is entitled to receive an annual base salary of $500,000 and is eligible to receive a target annual incentive bonus equal to 100% of his base salary based on the achievement of annual company and individual performance objectives for such fiscal year, subject to continued employment through the applicable payment date. Mr. Griggs is also eligible to participate in the Company's employee benefit programs offered to similarly situated employees.


Pursuant to the Employment Agreement, if Mr. Griggs' employment is terminated by the Company without "cause" or (y) by Mr. Griggs for "good reason" (as such terms are defined in the Employment Agreement), subject to his execution and non-revocation of a general release of claims in favor of the Company and its affiliates, Mr. Griggs is entitled to entitled to (x) any unpaid annual bonus in respect of any completed fiscal year that has ended prior to the date of such termination, (y) continued payment of base salary for a period of 24 months following such date of termination, and (z) an amount equal to two times his then-current target annual bonus, payable in substantially equal installments during the 24-month period following such date of termination in accordance with regular payroll practices.


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In connection with the Employment Agreement, Mr. Griggs entered into a restrictive covenant agreement, which includes a 24-month post-termination non-compete and non-solicit of the employees, consultants, clients, customers and other business relationships of the Company and its affiliates, and an indefinite covenant against making any disparaging or defamatory comments regarding the Company or any of its affiliates.


The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, which is attached as Exhibit 10.2 hereto and incorporated by reference herein.


There were no other arrangements or understandings between Mr. Lundberg or Mr. Griggs, on the one hand, and any other person, on the other, pursuant to which Mr. Lundberg or Mr. Griggs were selected as a director. Mr. Lundberg has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Pursuant to the Merger Agreement, Mr. Griggs received (i) 1,808,366 shares of the Company's Class A Common Stock; (ii) 16,862.19 shares of the Company's Series C Preferred Stock; (iii) 559,071 stock options to purchase Class A Common Stock at an exercise price of $4.38 per share and 782,699 stock options to purchase Class A Common Stock at an exercise price of $8.50 per share, in each case, as merger consideration; and (iv) approximately $74.9 million (net) cash consideration. 


For more information on the Merger Agreement, including the aggregate consideration, please refer to the description thereof under the heading "Agreement and Plan of Merger" in Item 1.01 of the Company's Current Report on Form 8-K filed with the SEC on December 7, 2020 and the full text of the Merger Agreement, which is attached as Exhibit 10.1 to such Current Report on Form 8-K.


On February 2, 2021, the Company entered into indemnification agreements with Mr. Lundberg and Mr. Griggs in the form attached as Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on November 14, 2019, which provides that, subject to limited exceptions, and among other things, the Company will indemnify Mr. Lundberg and Mr. Griggs to the fullest extent permitted by law for claims arising in their capacity as directors of the Company.