EMPLOYMENT AGREEMENT
This Agreement, dated as of July 1, 1996, by and between NATIONAL
HOME HEALTH CARE CORP., a Delaware corporation, with offices at 000 Xxxxx Xxxxxx
Xxxx, Xxxxxxxxx Xxx Xxxx 00000 (the "Company"), and XXXXXX X. XXXXXX, an
individual residing at 000 Xxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 ("Employee").
W I T N E S S E T H
WHEREAS, Employee is currently employed by the Company; and
WHEREAS, the Company wishes to continue to employ Employee;
NOW, THEREFORE, the parties agree as follows:
1. Employment: he Company hereby agrees to employ Employee and
Employee agrees to be employed by the Company upon the terms and conditions set
forth below for a period of one (1) year commencing on the date of this
Agreement, unless sooner terminated as herein provided (the "Employment
Period"). During the Employment Period, Employee will initially hold the
position of Vice President of Finance and Chief Financial Officer of the
Company, and, thereafter, hold such positions of an executive nature and perform
all duties and services incident to those positions as may be assigned to
Employee from time to time by the Board of Directors or the President of the
Company. Employee will devote substantially all his working time and energies to
the business of the Company to accomplish the duties assigned by the Board of
Directors of the Company, will perform those duties to the best of Employee's
ability and will devote Employee's best efforts to advance the interests of the
Company.
2. Compensation: For all services performed by Employee for the
Company during the Employment Period, the Company will pay Employee a salary at
the rate of $107,000 per annum until August 1, 1996 and increasing by five
percent (5%) of the original rate for each subsequent twelve-month period
thereafter ("Salary"), payable in accordance with the normal payment practices
of the Company. The Company will provide Employee the use, for business
purposes, of a full-sized domestic automobile owned or leased by the Company,
Employee will be entitled to vacation during the Employment Period not to exceed
three weeks per annum. The vacation may be taken at times agreed upon by
Employee and the Company. During that vacation, Employee will receive Employee's
usual compensation. No additional compensation will be paid to Employee for
vacation time that is not taken. Employee will be entitled to participate, at a
level commensurate with his position, in any benefit plans, including health,
pension and stock option plans adopted by the Company for its executive
employees.
3. Reimbursement of Expenses: The Company recognizes that Employee,
in performing Employee's duties under this Agreement, may be required to spend
sums of money in connection with those duties on behalf of or for the benefit of
the Company. Employee may present
to the Company, on a weekly basis, an itemized voucher listing all sums of money
paid or expenses incurred by Employee in the performance of Employee's duties on
behalf of or for the benefit of the Company, and, on presentation of that
itemized voucher, the Company will reimburse Employee or pay the expense
incurred for all reasonable expenses itemized on the voucher including, but not
limited to, travel, meals, lodging, entertainment and promotion. In addition,
commencing as of the date hereof, the Company will initially pay to Employee the
amount of Employee's annual contribution under the Company's Premium Conversion
Plan (the "Annual Premium Contribution Amount"), payable in accordance with the
normal payment practices of the Company.
4. Death and Disability:
A. The Employment Period shall terminate on the date of
Employee's death, in which event Employee's Salary and Annual Premium
Contribution Amount earned or accrued and reimbursable expenses owing, if any,
through the date of Employee's death, shall be paid to Employee's estate.
Employee will not be entitled to any other compensation upon termination of this
Agreement pursuant to this paragraph 4(A).
B. If, during the Employment Period, in the opinion of the
Company, Employee, because of physical or mental illness or incapacity, shall
become substantially unable to perform the duties and services required of him
under this Agreement for a period of three (3) consecutive months or four (4)
months in the aggregate during any six (6) month period, the Company may, upon
at least ten (10) days' prior written notice given at any time after the
expiration of such three (3) or four (4) month period, as the case may be, to
Employee of its intention to do so, terminate this Agreement as of such date as
may be set forth in the notice. In case of such termination, Employee shall be
entitled to receive his Salary and Annual Premium Contribution Amount earned or
accrued and reimbursable expenses owing to Employee through the date of
termination. Employee will not be entitled to any other compensation upon
termination of this Agreement pursuant to this paragraph 4 (B).
5. Discharge for Cause: The Company may discharge Employee for cause
at any time. Cause for discharge will exist when (i) Employee materially
breaches this Agreement and such breach is not cured within thirty (30) days
following written notice by the Company to Employee of such breach, (ii)
Employee commits any act or engages in any course of action involving moral
turpitude which adversely affects the reputation of the Company, or (iii)
Employee breaches any policy applicable to all executive officers of the Company
promulgated by Company's Board of Directors, the breach of which has been
specified by the Board of Directors to be cause for discharge, including,
without limitation, those policies set forth in the Addendum to Employment
Agreement between the Company and Employee attached hereto and incorporated
herein by reference. If, during the Employment Period, Employee is discharged
for cause, this Agreement terminates and the Company, without any limitation on
any remedies it may have at law or equity, is without liability for Salary or
any other liability to Employee after the date of such discharge.
-2-
6. Disclosure of Confidential Information: "Confidential Information"
means all information known by Employee, because of employment by the Company,
about the Company's present or prospective products, processes, services, or
activities. Confidential Information does not include information generally
known, other than through breach of a confidentiality agreement with the
Company, in the industries in which the Company engages or may engage. The
determination as to whether information is generally known in the industries in
which the Company engages or may engage will be made, in good faith, solely by
the Company and will be binding on Employee. Employee will never, during or
after the Employment Period, directly or indirectly, use any Confidential
Information except in the performance of Employee's duties for the Company, or
publish or disclose any Confidential Information except to persons to whom
disclosure of Confidential Information is necessary in the performance of
Employee's duties and to other persons as directed by the Company. The Company
has the right to decide in what circumstances disclosures of Confidential
Information are necessary. Employee will use his best efforts to prevent
unauthorized use or disclosure of Confidential Information. Upon termination of
employment with the Company, Employee will deliver to the Company all writings
relating to or containing Confidential Information, including, without
limitation, notes, memoranda, letters, drawings, diagrams and printouts and also
including any tapes, discs or other forms of recorded information. Full
compliance with this paragraph is a condition of continued employment with,
retention by or association with, the Company. If Employee violates any
provision of this paragraph during the Employment Period, the Company may
immediately discharge Employee without any liability for Salary or an other
liability to Employee after the date of discharge. If Employee violates any
provision of this paragraph during or after the Employment Period, the Company
will have no further liability to Employee, including rights, benefits,
privileges or other interests which may have vested for Employee's account
during the Employment Period. Moreover, if Employee violates any provision of
this paragraph during or after the Employment Period, the company may seek full
indemnification from Employee should the Company suffer any monetary damages or
incur any legal liability to any person as a result of the disclosure or use of
Confidential Information by Employee in violation of this paragraph.
7. Restrictive Covenants: During the Employment Period and for a
period of six (6) months thereafter, Employee will not directly or indirectly,
either as an individual or as a partner, joint venturer, independent contractor,
consultant, stockholder, director, employee or officer, engage in or participate
in the management or ownership of any business or activity in the New York City
metropolitan area, including suburban and other counties of New York, New Jersey
and Connecticut generally considered a part of such area, or in any other state
in which the Company is registered to do business as of the date of termination
of the Employment Period which directly or indirectly competes with the business
conducted by the Company. Employee recognizes and hereby acknowledges that the
restrictions imposed upon Employee in this paragraph are reasonable and are
necessary for the protection of the business of the Company.
8. Ownership of Inventions, Discoveries and Improvements: Employee
shall promptly disclose in writing to the Board of Directors of the Company all
inventions, discoveries, designs, developments, processes, software programs,
works of authorship, formulas, data, techniques and any other improvements
conceived, devised, created, or developed by Employee
-3-
(either alone or with others) while in the employ of the Company (collectively,
"Invention"), and Employee shall transfer and assign to the Company all right,
title and interest in and to such Invention, including any and all domestic and
foreign patent rights, domestic and foreign copyright rights therein, and any
renewal thereof. Such disclosure is to be made promptly after the conception of
each Invention, and each Invention is to become and remain the property of the
Company, whether or not patent or copyright applications are filed thereon by
the Company. On request of the Company, Employee shall execute from time to
time, during or after the termination of employment, such further instruments
including, without limitation, applications for patents and copyrights and
assignments thereof as maybe deemed necessary or desirable by the Company to
effectuate the provisions of this paragraph 8.
9. Construction: If the provisions of paragraph 7 should be deemed
unenforceable, invalid, or overbroad in whole or in part for any reason, then
any court of competent jurisdiction or any Arbitrator appointed in accordance
with paragraph 10 is hereby authorized, requested and instructed to reform such
paragraph to provide for the maximum competitive restraints upon Employee's
activities (in time, product, geographic area, and customer solicitation as may
then be legal and valid).
10. Remedies, Damages and Jurisdiction:
A. Employee agrees that violation of paragraphs 6, 7 or 8
would cause irreparable injury to the Company for which the remedy at law would
be inadequate, and that the Company shall be entitled in any court of law or
equity or in any arbitration proceeding in accordance with this paragraph 10,
whichever forum is designated by the Company, to preliminary, permanent or other
injunctive relief against any breach of the provisions contained in paragraphs
6, 7 or 8, and such punitive and compensatory damages as shall be awarded.
Further, in the event of a violation of the provisions of paragraph 7, the
period of noncompetition referred to therein shall be extended but not decreased
for a period of time equal to the period that the violation occurred.
B. Except as otherwise provided in paragraphs 9 and 10A
relating to the reformation of the restrictive covenants and obtaining equitable
relief, any controversy or claim arising out of, or relating to this Agreement,
or the breach thereof, shall be settled by arbitration by one arbitrator in New
York, New York, in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
C. Each of the Company and Employee hereby consents to the
jurisdiction of the Supreme Court of the State of New York for the County of New
York and the United States District Court for the Southern District of New York
for all purposes in connection with said arbitration or for obtaining the relief
referred to in paragraphs 6, 7 or 8, and further consents that any process or
notice of motion therewith may be served by certified or registered mail or
personal service, within or without the State of New York, provided a reasonable
time for appearance is allowed.
-4-
11. Change in Control Bonus. In the event of a Change in Control, as
defined below, the Company promptly shall pay to Employee a lump-sum amount
equal to one-half of Employee's Salary at the time of the occurrence of such
Change in Control. The Company hereby agrees to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement. For purposes
of this Agreement, a "Change in Control" shall have occurred if:
(i) any "person", as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(ii) during any period of not more than two consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
12. Assignment. Neither this Agreement, nor any of Employee's rights,
powers, duties or obligations hereunder, may be assigned by Employee. This
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and legal representatives and the Company and its successors and assigns.
Successors of the Company shall include, without limitation, any corporation
-5-
or corporations acquiring, directly or indirectly, all or substantially all of
the assets of the Company, whether by merger, consolidation, purchase, lease or
otherwise, and such successor shall thereafter be deemed "the Company" for the
purpose hereof.
13. Severability: If any of the provision of this Agreement is held
to be invalid, illegal, or unenforceable, that determination will not affect the
enforceability of any other provisions of this Agreement, and the remaining
provisions of this Agreement will be valid and enforceable according to their
terms.
14. Binding Effect: This Agreement constitutes the entire
understanding of the parties, may be modified only in writing, is governed by
and construed in accordance with the laws of the state of New York, without
regard to the conflicts of law rules thereof, and will be binding upon and inure
to the benefit of Employee and Employee's personal representatives and the
Company and the Company's successors and assigns. This Agreement is in the
nature of a personal services contract, is not assignable by Employee and the
duties imposed hereby are non-delegable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxxxx X. Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxx
------------------------------
XXXXXX X. XXXXXX
-6-
ADDENDUM TO EMPLOYMENT AGREEMENT:
BUSINESS POLICIES OF NATIONAL HOME HEALTH CARE CORP.
This addendum supplements and is hereby incorporated into the terms
of your Employment Agreement. The Company has set forth in this addendum basic
principles and standards of conduct that senior management of the Company is
expected to follow in all respects. You have a personal responsibility to abide
by each of the standards. Each person, alone, is responsible for his actions. No
one will be permitted to justify an illegal act by claiming it was ordered by
someone higher in management. No one, regardless of level or position, is ever
authorized to direct an employee to commit an illegal or unethical act.
As a summary of basic principles, this addendum does not include all
the rules and regulations that apply to every situation. The absence of a
specific practice or instruction covering a particular situation does not
relieve you from exercising the highest ethical standards applicable to the
circumstances. If you have questions as to what the proper course of conduct
should be in any given situation consult me and the Company's legal counsel.
Violations of the guidelines set forth below can result in
disciplinary action, including dismissal, and possible criminal prosecution.
Any reprisal against an employee who in good faith reports a
violation or suspected violation of law or company policies is strictly
forbidden.
* * *
1. It is the Company's policy to comply fully with the law. We should
avoid even the appearance of wrongdoing and, at all times, should conduct our
business according to the highest ethical standards.
Since the Company is a medical services company, there are many state
and federal laws and regulations which affect and define the responsibilities of
each employee. These laws and regulations must be adhered to at all times. If
there is ever any doubt on your part about the meaning of a law or regulation
you must check with corporate counsel or special counsel. You are responsible
for designing, implementing and monitoring quality control programs to assure
that Company policies are being followed and that all personnel are in
compliance. In connection with any compliance program, it is vital that you be
sure that no falsification of records be allowed and you must undertake to have
programs developed to assure that this does not happen.
2. The Company shall not tolerate any unfair competition. Additional
guidelines relating to this general policy are,:
- do not interfere with contracts made between a prospective
customer and a competitor.
- never engage in commercial bribery.
- do not disparage a competitor's services,
- be accurate and truthful in all dealings with customers
and be careful not to misrepresent the state and quality,
features or availability of our services.
3. The Company awards business to suppliers solely on merit. You
should have no relationship, financial or otherwise, with any supplier or
competitor that might be construed as a
-2-
conflict of interest or that might even appear to impair your independent
judgment on behalf of the Company. Gifts, loans or any other thing of
significant value should not be accepted or solicited, even indirectly.
4. Each employee's primary obligation is to the Company, and,
therefore, any form of outside activity must be kept totally separate from
employment with the Company. No outside' activity should involve the use of
Company assets, materials or facilities.
5. You cannot use your position in the Company for outside gain or
benefit, nor should you use property or other confidential or private
confidential information in any outside activity.
6. The law requires that the Company's books and records accurately
and fairly reflect transactions in reasonable detail, and that the Company's
internal accounting controls provide reasonable assurances that:
- transactions are carried out in an authorized manner.
- transactions have been reported and recorded to permit
correct preparation of financial statements and to
maintain accurate records of assets. access to assets is
in accordance with management's authorization.
- inventories of assets are taken periodically and
appropriate action is taken to correct discrepancies.
7. Every employee who has control over Company funds is personally
accountable for such funds. There are no exceptions to this rule.
-3-
When spending Company money or personal money that will be
reimbursed, or requesting services that will cause Company money to be spent,
the employee involved should make sure the Company receives proper value in
return and should be sure the expenditure is for a legitimate business purpose.
Anyone responsible for the handling of Company revenue, and the
associated records and materials, is accountable for their safe keeping.
8. The Company categorically forbids the use of corporate funds for
the support of political parties or candidates. No employee is authorized to
make or approve such a contribution.
9. Company business records must always be prepared accurately and
reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.
10. Records containing personal data on patients and the Company's
employees are confidential. As such, they are to be carefully safeguarded and
kept current and accurate. They should be disclosed only to authorized personnel
having a "need to know" or pursuant to lawful processes. Should you have any
questions about disclosure, consult with the Company's legal counsel before
disclosing.
11. When a dishonest act by an employee is discovered it should be
reported immediately and directly to me.
12. The Company encourages employees to participate in its future by
investing in its securities. However, in trading in Company securities you
should be aware that it may be illegal (and possibly result in civil or criminal
penalties) to buy or sell Company securities while in possession of material
non-public information about the Company.
-4-
Material information can be anything that could have actual
significance in an investors decision, such as acquisition plans; dividends,
earnings, new contracts, products; major regulatory, court or legislative
events; and major management changes or other business plans. Employees aware of
such, information prior to its being made public should not buy or sell company
securities until the information has been made public.
Employees should not trade in the securities of other companies when
they know material non-public information about these companies which they learn
as part of their job. For example, you may learn that another company is being
considered for a major contract or any other information which could have actual
significance in an investor's decision about the securities of the other
Company.
Employees should keep any such-information about the Company or any
other company secret and use it only for Company 'purposes, because it is
unlawful to "tip" others who may buy or sell such securities, even though the
tipper does not.
Some types of trading -- even if innocent -- could appear to the
public and to public officials to be based on the misuse of inside information
concerning the Company. To avoid even an appearance of impropriety, employees
are not to engage in short term speculation in company securities (that is, the
purchase and sale on the open market within a six month period). Nor should an
employee engage in any transaction when he stands to profit due to the short
term savings in the value of the Company's securities. An example of this type
of trading includes "short sales" (selling borrowed securities which the seller
hopes can be purchased at a lower price when they are due for delivery).
-5-
Please indicate your acceptance of the Company's business policies by
signing a copy of this addendum provided below.
/s/ Xxxxxxxxx X. Xxxxxxx
------------------------
Xxxxxxxxx X. Xxxxxxx
I have read and understand the
Company's Business Policies and
agree to fully comply with all
requirements of law affecting the
Company and the Business Policies
set forth herein.
/s/ Xxxxxx X. Xxxxxx
--------------------------
-6-
