LEXINGTON HEALTHCARE GROUP, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this ___ day of _______, 1997 by and
between LEXINGTON HEALTHCARE GROUP, INC., a Delaware corporation, having an
office at 00 Xxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to
as "Employer") and XXXXXXX XXXXXXXXX, an individual with an address c/o
Lexington Healthcare Group, Inc., 00 Xxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000
(hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer desires to employ, Employee as Executive Vice President
of Employer; and
WHEREAS, Employee is willing to be employed as the Executive Vice
President in the manner provided for herein, and to perform the duties of the
Executive Vice President of Employer upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of Executive Vice President. Employer hereby employs
Employee as Executive Vice President.
2. Term.
a. Subject to Section 9 below and further subject to Section 2(b)
below, the term of this Agreement shall commence on the effective date of the
Company's Registration Statement (the "Commencement Date") and expire three
years from such date. Each 12 month period from the Commencement Date forward
during the term hereof shall be referred to as an "Annual Period." During the
term hereof, Employee shall devote substantially all of his business time and
efforts to Employer and its subsidiaries and affiliates.
b. Subject to Section 9 below, unless the Board of Directors of the
Company (the "Board") of Employer shall determine to the contrary and shall so
notify Employee in writing on or
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before the end of any Annual Period or unless the Employee notifies Employer in
writing on or before the end of any Annual Period of his desire not to renew
this Agreement, then at the end of each Annual Period, the term of this
Agreement shall be automatically extended for one (1) additional Annual Period
to be added at the end of the then current term of this Agreement.
3. Duties. The Employee shall perform those functions generally performed
by persons of such title and position, shall attend all meetings of the
stockholders and the Board, shall perform any and all related duties and shall
have any and all powers as may be prescribed by resolution of the Board, and
shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly and solely to the Board.
4. Compensation.
a. (i) Employee shall be paid a salary of $100,000 for each Annual
Period thereafter with a 5% annual increase. Employee shall be paid periodically
in accordance with the policies of the Employer during the term of this
Agreement, but not less than monthly.
b. (i) In the event of a "Change of Control" whereby
(A) A person (other than a person who is an officer or a Director of
Employer on the effective date hereof), including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, becomes, or obtains the
right to become, the beneficial owner of Employer securities having 30% or more
of the combined voting power of then outstanding securities of the Employer that
may be cast for the election of directors of the Employer;
(B) At any time, the Board-nominated slate of candidates for the
Board is not elected;
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(C) Employer consummates a merger in which it is not the surviving
entity;
(D) Substantially all of Employer's assets are sold; or
(E) Employer's stockholders approve the dissolution or liquidation
of Employer; then
(ii) (A) Employee shall be eligible to receive a one-time bonus,
equal on an after-tax basis to two times his then current annual base salary. To
effectuate this provision, the bonus shall be "grossed-up" to include the amount
necessary to reimburse Employee for his federal, state and local income tax
liability on the bonus and on the "gross-up" at the respective effective
marginal tax rates. In no event shall this bonus exceed three times Employee's
then current base salary. Said bonus shall be paid within thirty (30) days of
the Change of Control.
(B) All stock options, warrants and stock appreciation rights
("Rights") granted by Employer to Employee under any plan or otherwise prior to
the effective date of the Change of Control, shall become vested, accelerate and
become immediately exercisable. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of the
registration statement; provided, however, that such period may be extended or
delayed by Employer for one period of up to 60 days if, upon the advice of
counsel at the time such registration is required to be filed, or at the time
Employer is required to exercise its best efforts to cause such registration
statement to become effective, such delay is advisable and in the best interests
of Employer because of the existence of non-public material information, or to
allow Employer to complete any pending audit of its financial statements;
c. Employer shall include Employee in its health insurance program
available to Employer's executive officers and shall pay 100% of the premiums
for such program.
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d. Employee shall have the right to participate in any other
employee benefit plans established by Employer.
5. Expenses. Employee shall be reimbursed for all of her actual
out-of-pocket expenses incurred in the performance of her duties hereunder,
provided such expenses are acceptable to Employer, which approval shall not be
unreasonably withheld, for business related travel and entertainment expenses,
and that Employee shall submit to Employer reasonably detailed receipts with
respect thereto.
6. Vacation. Employee shall be entitled to receive four (4) weeks paid
vacation time after each year of employment upon dates agreed upon by Employer.
Upon separation of employment, for any reason, vacation time accrued and not
used shall be paid at the salary rate of Employee in effect at the time of
employment separation.
7. Secrecy. At no time shall Employee disclose to anyone any confidential
or secret information (not already constituting information available to the
public) concerning internal affairs or proprietary business operations of
Employer.
8. Covenant Not to Compete. Subject to, and limited by, Section 10(b),
Employee will not, at any time, anywhere in the world, during the term of this
Agreement, and for one (1) year thereafter, either directly or indirectly,
engage in, with or for any enterprise, institution, whether or not for profit,
business, or company, competitive with the business (as identified herein) of
Employer as such business may be conducted on the date thereof, as a creditor,
guarantor, or financial backer, stockholder, director, officer, consultant,
advisor, employee, member, inventor, producer, director, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange or through
the NASDAQ Stock Market. As used in this Agreement, the business of Employer
shall be deemed
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to include the operation of nursing homes and the provision of home health care
services.
9. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement upon written notice for
Cause. For purposes hereof, "Cause" shall mean (A) engaging by the Employee in
conduct that constitutes activity in competition with Employer; (B) the
conviction of Employee for the commission of a felony; (C) the failure to follow
the instructions of the Board of Directors and/or (D) the habitual abuse of
alcohol or controlled substances. Notwithstanding anything to the contrary in
this Section 9(a)(i), Employer may not terminate Employee's employment under
this Agreement for Cause unless Employee shall have first received notice from
the Board advising Employee of the specific acts or omissions alleged to
constitute Cause, and such acts or omissions continue after Employee shall have
had a reasonable opportunity (at least 10 days from the date Employee receives
the notice from the Board) to correct the acts or omissions so complained of. In
no event shall alleged incompetence of Employee in the performance of Employee's
duties be deemed grounds for termination for Cause.
(ii) Employer may terminate Employee's employment under this
Agreement if, as a result of any physical or mental disability, Employee shall
fail or be unable to perform his duties under this Agreement for any consecutive
period of 90 days during any twelve-month period. If Employee's employment is
terminated under this Section 9(a)(ii): (A) for the first six months after
termination, Employee shall be paid 100% of his full compensation under Section
4(a) of this Agreement at the rate in effect on the date of termination, and in
each successive 12 month period thereafter Employee shall be paid an amount
equal to 67% of his compensation under Section 4(a) of this agreement at the
rate in effect on the date of termination; and (B) Employee shall continue to be
entitled, insofar as is permitted under applicable insurance policies or plans,
to such general medical and employee benefit plans (including profit sharing or
pension plans) as Employee had been entitled to on the date of termination. Any
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amounts payable by Employer to Employee under this paragraph shall be reduced by
the amount of any disability payments payable by or pursuant to plans provided
by Employer and actually paid to Employee.
(iii) This agreement automatically shall terminate upon the death of
Employee, except that Employee's estate shall be entitled to receive any amount
accrued under Section 4(a) and the pro-rata amount payable under Section 4(e)
for the period prior to Employee's death and any other amount to which Employee
was entitled of the time of his death.
b. Termination by Employee
(i) Employee shall have the right to terminate his employment under
this Agreement upon 30 days' notice to Employer given within 90 days following
the occurrence of any of the following events (A) through (F):
(A) Employee is not elected or retained as Executive Vice
President.
(B) Employer acts to materially reduce Employee's duties and
responsibilities hereunder. Employee's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
Employer is (or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have the same
duties and responsibilities with respect to Employer's business, and Employee
shall report directly to the chief executive officer and/or board of directors
of the entity (or individual) that acquires Employer or its assets.
(C) A Material Reduction (as hereinafter defined) in Employee's
rate of base compensation, or Employee's other benefits. "Material Reduction"
shall mean a ten percent (10%) differential;
(D) A failure by Employer to obtain the assumption of this
Agreement by any successor;
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(E) A material breach of this Agreement by Employer, which is not
cured within thirty (30) days of written notice of such breach by Employer;
(F) A Change of Control.
(ii) Anything herein to the contrary notwithstanding, Employee may
terminate this Agreement upon thirty (30) days written notice.
c. If Employer shall terminate Employee's employment other than due to
his death or disability or for Cause (as defined in Section 9(a)(i) of this
Agreement), or if Employee shall terminate this Agreement under Section 9(b)(i),
Employer's obligations under Section 4 shall be absolute and unconditional and
not subject to any offset or counterclaim and Employee shall continue to be
entitled to receive all amounts provided for by Section 4 and all additional
employee benefits under Section 4 regardless of the amount of compensation he
may earn with respect to any other employment he may obtain.
10. Consequences of Breach by Employer; Employment Termination
a. If this Agreement is terminated pursuant to Section 9(b)(i) hereof,
or if Employer shall terminate Employee's employment under this Agreement in any
way that is a breach of this Agreement by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and in addition to his salary
continuation pursuant to Section 9.c., above, a cash payment equal to the
Employee's total base salary as of the date of termination hereunder for the
remainder of the term plus an additional amount to pay all federal, state and
local income taxes thereon on a grossed-up basis as heretofore provided, payable
within 30 days of the date of such termination.
(ii) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a) and (b)
above.
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b. In the event of termination of Employee's employment pursuant to
Section 9(b)(i) of this Agreement, the provisions of Section 8 shall not apply
to Employee.
11. Remedies
Employer recognizes that because of Employee's special talents, stature
and opportunities in the computer industry, and because of the special creative
nature of and compensation practices of said industry and the material impact
that individual projects can have on company's results of operations, in the
event of termination by Employer hereunder (except under Section 9(a)(i) or
(iii), or in the event of termination by Employee under Section 9(b)(i) before
the end of the agreed term, the Employer acknowledges and agrees that the
provisions of this Agreement regarding further payments of base salary, bonuses
and the exercisability of Rights constitute fair and reasonable provisions for
the consequences of such termination, do not constitute a penalty, and such
payments and benefits shall not be limited or reduced by amounts' Employee might
earn or be able to earn from any other employment or ventures during the
remainder of the agreed term of this Agreement.
12. Excise Tax. In the event that any payment or benefit received or to be
received by Employee in connection with a termination of his employment with
Employer would constitute a "parachute payment" within the meaning of Code
Section 280G or any similar or successor provision to 280G and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.
13. Arbitration. Any controversies between Employer and Employee involving
the construction or application of any of the terms, provisions or conditions of
this Agreement, save and except for any breaches arising out of Sections 8 and 9
hereof, shall on the written request of either party served on the other be
submitted to arbitration. Such arbitration shall comply with and
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be governed by the rules of the American Arbitration Association. An arbitration
demand must be made within one (1) year of the date on which the party demanding
arbitration first had notice of the existence of the claim to be arbitrated, or
the right to arbitration along with such claim shall be considered to have been
waived. An arbitrator shall be selected according to the procedures of the
American Arbitration Association. The cost of arbitration shall be born by the
losing party or in such proportions as the arbitrator shall decide. The
arbitrator shall have no authority to add to, subtract from or otherwise modify
the provisions of this Agreement, or to award punitive damages to either party.
14. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
15. Entire Agreement; Survival. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this Agreement
shall not effect the enforceability of any other provision. This Agreement may
not be amended except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as sought. Waiver of
or failure to exercise any rights provided by this Agreement and in any respect
shall not be deemed a waiver of any further or future rights.
b. The provisions of Sections 4, 7, 8, 9(a)(ii), 9(a)(iii), 9(c), 11,
12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this Agreement.
16. Assignment. This Agreement shall not be assigned to other parties.
17. Governing Law. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto
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shall be governed by the internal laws of the State of Connecticut, without
regard to the conflicts of laws principles thereof.
18. Notices. All notices, responses, demands or other communications under
this Agreement shall be in writing and shall be deemed to have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt confirmed), provided that a
copy is mailed by registered or certified mail, return receipt requested; or
c. received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as the party may designate to itself by notice to the other
parties:
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(i) if to the Employer:
Lexington Healthcare Group, Inc.
00 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telefax: (000) 000-0000
Telephone: (000) 000-0000
Xxxxxxx, Savage, Kaplowitz, Xxxxxxxxxx &
Xxxxxx
000 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telefax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxx Xxxxxxxxxxx
c/o Lexington Healthcare Group, Inc.
00 Xxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxx 00000
19. Severability of Agreement. Should any part of this Agreement for any
reason be declared invalid by a court of competent jurisdiction, such decision
shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written.
LEXINGTON HEALTHCARE GROUP, INC.
By:
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Xxxxx Xxxxxx
President
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Xxxxxxx Xxxxxxxxx
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