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EXHIBIT 10.43
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 24th day of Nov., 1997 by and between
Balanced Care Corporation, a Delaware corporation with a principal office at
0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxxx, Xx., 00000 (the "Company") and
Xxxxxxx X. Xxxxxx, an individual health care executive residing at 0000 X.
Xxxxxxxxx Xxx, Xxxxxxxxxxxxx, Xx. 00000 (the "Executive").
WITNESSETH;
WHEREAS, the Company desires to retain the services and employment of
Executive as Chief Operating Officer for the benefit of itself and each of its
subsidiaries throughout the term of this Agreement, and Executive is willing to
be employed by Company in the foregoing capacity for such period, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
1. Employment. The Company hereby employs Executive and Executive hereby
accepts employment by the Company subject to all of the terms and
conditions hereafter set forth.
2. Capacity. Executive shall serve as Chief Operating Officer of the Company
("COO") and in such capacity shall report directly to the Chief Executive
Officer of the Company.
3. Duties. During the term of this Agreement and any extension thereof,
Executive shall and agrees to devote his business attention and best
efforts during normal business hours to the performance of the customary
duties of the office of COO of the Company, including supervisory
responsibility for all operating groups, including assisted living, skilled
nursing, marketing, human resources and ancillary services such as medical
rehabilitation, home health and outpatient services. Executive agrees to
perform such other or additional duties not inconsistent with the customary
position of COO, all as may be assigned from time to time by the Board of
Directors of the Company (the "Board")and the Chief Executive Officer of
the Company.
4. Active Duty Date, Term of Employment and Renewal. The duties of Executive
under this Agreement shall commence on January 5, 1998, which date shall
hereafter be referred to as the Active Duty Date. Unless earlier
terminated as hereafter provided, this Agreement shall expire three (3)
years after the Active Duty Date (the "Term"), provided however, that upon
expiration of such Term, this Agreement shall be extended for an additional
three year term and thereafter shall extend on each three year anniversary
date of this Agreement for an additional three year term (each, an
"Extension Term") without further action on the part of the parties
hereto, unless either party gives written notice of termination to the
other party at least one-hundred eighty(180) days prior to the expiration
of the then current Term or any Extension Term that it does not desire to
renew the Agreement. The date upon which the Term hereof, as extended from
time to time pursuant to an Extension Term, shall expire is hereinafter
referred to as the "Expiration Date".
5. Compensation.
(a) Cash Compensation. During the first year after the Active Duty Date,
as compensation for services to the Company, Company shall pay to
Executive a base salary in the amount of $170,000 per year (the "Base
Salary"), payable in equal installments in accordance with the
Company's payroll practices then applicable to Executive officers. On
the one year anniversary of Executive's Active Duty Date , the Base
Salary shall increase to $200,000 per year. Thereafter during the
term of this Agreement or any extension thereof the Base Salary shall
be adjusted annually on each anniversary date of the Active Duty Date
in an amount equal to 10% per year.
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Additionally, the Board of Directors of the Company may, in its sole discretion
from time to time, increase the Base Salary to be paid to Executive under this
paragraph, or provide additional compensation to Executive, including but not
limited to, the annual bonus provided in Section 5 (b) below, whether
permanently or for a limited period of time, based upon the performance of
Executive, the financial performance of the Company, compensation paid to
comparable officers by other companies in the industry and such other factors
as the Board may deem relevant.
(b) Annual Bonus. The Executive shall be eligible to
receive an annual bonus of up to 50% of his then current Base Salary
based upon (i.)Executive's performance as determined pursuant to
written annual performance objectives mutually agreed upon by
Executive and the CEO and approved by the Board, which approval will
not be unreasonably withheld and (2) the Company's achievement of its
annual pre-tax earnings (determined in accordance with generally
accepted accounting principles and after giving effect, to the extent
appropriate, to minority interests) level approved by the Board of
Directors in the annual operating budget for a particular year.
( c ) Signing Bonus. In further consideration of Executive
entering into this Agreement, Company shall pay Executive a signing
bonus of $20,000 payable on the first regularly scheduled pay period
following Executive's Active Duty Date with the Company as COO.
(d) Stock Options. The Executive will be eligible to participate
in the Company's 1996 Stock Incentive Plan, as such plan may be
amended from time to time (the "Plan"). Executive shall be granted an
option to purchase 150,000 shares of the Company's common stock at a
price equal to the fair market value (based on the lowest price of the
day) on the date of grant, which for purposes of this Agreement is
the Active Duty Date (the "Grant Date"). Such stock options shall
vest over four (4) years at the rate of 25% per year. Additionally, on
the first anniversary of the Active Duty Date and on each subsequent
one year anniversary thereafter during the term of this Agreement or
any extension thereof, Executive shall be granted an option to
purchase no less than 30,000 shares of the Company's common stock,
subject in each case to availability of such shares under the Plan,
the terms and conditions of the Plan and Board approval, which
approval will not be unreasonably withheld.
(e) Vacation. The Executive shall be entitled to a vacation of
four (4) weeks annually inaccordance with the policies of the Company
applicable to comparable executives of the Company. Any time spent
by the Executive at professional meetings and other similar meetings
so as to better enable the Executive to perform his professional
services on behalf of the Company shall not be considered vacation
time.
(f) Fringe Benefits. The Executive shall enjoy and benefit under
all fringe benefit plans, programs or arrangements sponsored
by the Company for employees generally or for executive
officers in accordance with the respective terms and
conditions thereof, as the same may be amended from time to
time.
Notwithstanding the foregoing, the Company may, without breaching the terms of
this Agreement, amend any employee benefit plan and/or fringe benefit plan in
which the Executive participates or any policy applicable to vacations or other
terms and conditions of employment generally applicable to executive officers
of the Company provided that such amendment is applicable to and
proportionately affects all executive employees of the Company in positions
comparable to the Executives'.
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6. Confidentiality.
Commencing immediately upon the signing of this Agreement and
during Executive's employment with the Company and for any subsequent period
with respect to which he is entitled to receive Severance Rights under this
Agreement, the Executive shall keep secret and confidential all matters of the
Company or relating to the Company, its operations and businesses which are
not, as of the time immediately preceding disclosure, in the public domain and
generally known by the public (the "Confidential Information"). Executive
shall not intentionally or through gross negligence disclose Confidential
Information to any third party without the express written consent of the
Company and may only utilize such information during the normal course of
performing his duties for the Company and solely for the Company's benefit.
Executive acknowledges and agrees that any breach of this Section 6
will cause the Company irreparable injury to which the Company shall have no
adequate remedy at law. Therefore, Executive agrees that the Company shall be
entitled, in addition to any remedies it may have under this Agreement or at
law, to injunctive and other equitable relief to prevent or curtail any breach
of the provisions of this Section 6 by Executive.
7. Termination of Employment.
This Agreement. The Term hereof, as extended by any Extension Term,
and the Executive's employment and right to receive salary and other benefits
set forth in Section 5 hereof (other than salary and other benefits accrued
through the date of termination) , collectively referred to hereafter as the
"Employment Rights",shall terminate on the earlier of the events described
below; provided, however, that upon a termination of Employment Rights, the
Plan shall remain in effect to the extent provided by its terms and shall
remain enforceable in accordance with its terms and further provided that, in
the event of certain termination, the Executive shall have the right to receive
payments and other benefits, if any, (the "Severance Rights"), as set forth
below in this Section 7:
(a) On the Expiration Date. The Executive's Employment Rights shall
terminate on the then Expiration Date of this Agreement ;
provided, however the Executive shall be entitled to receive
Severance Rights after the Expiration Date of this Agreement in
the event that the Expiration Date is as a result of the Company
giving notice pursuant to Section 4 hereof that it does not desire
to renew the Agreement.
(b) Death or Disability. The Executive's Employment Rights shall
terminate upon his death or Disability (as defined in subsection
(g) (III) below) and the Executive shall have the right to receive
a pro-rata portion of any Annual Bonus payment which may be
accrued for the year in which such death or Disability occurred.
Nothing contained herein shall be deemed to prevent the receipt by
the Executive or his spouse or estate, as the case may be, of any
benefit payable to or with respect to such death or Disability
under any plan, program or arrangement then sponsored by the
Company, if applicable.
(c) Voluntary Resignation by the Executive. The Executive's
Employment Rights shall terminate on the effective date of his
voluntary resignation and he shall not be entitled to receive any
Severance Rights unless such voluntary resignation is made after
and as a consequence of a Change in Control of the Company ( as
defined in subsection (g) (II) below.
(d) Cause. The Company may terminate the Executive's Employment
Rights for Cause (as defined in subsection (g) (I) below), in
which case the Executive shall not be entitled to receive any
Severance Rights.
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(e) Termination by the Company for Reasons Other Than Cause . If the
Company terminates Executive without Cause, all outstanding stock
options granted to Executive under the Plan shall immediately
become vested and shall be exerciseable in accordance with the
provisions of the Plan and, additionally,Executive shall be
entitled (1) to receive a lump sum cash payment, payable fifteen
(15) days following his termination of employment, equal to the
sum of (i.) the amount determined by multiplying by three (3) the
annual Base Salary at the rate then in effect on the date of
termination and (ii) the amount of the potential Annual Bonus
percentage payable under Section 5(b) hereof for the year in which
the termination took place. For example, if at the time of such
termination Executive's Base Salary was $170,000, and his Annual
Bonus percentage was 50%, i.e. $85,000, the lump sum payment would
be $595,000, i.e.$170,000 x3 plus $85,000, and (2) to participate,
for a period of one (1) year from the date of Executive's
termination, together with his beneficiaries and dependents, in
all insurance plans and accident and health plans maintained by
the Company prior to such termination and in which Executive was
entitled to participate prior to such termination, or, at the
Company's sole option and election, to receive the full cash value
of such benefits in a lump sum payable at the time of payment of
the sum specified above in subparagraph (1). The vesting of stock
options referred to in this paragraph, together with the payments
and/or benefits set forth in subsection (1) and (2) of this
paragraph, are hereafter collectively referred to as the
"Severance Rights". The Severance Rights payment will be made in
recognition of the Executive's performance prior to termination of
employment and the obligations of confidentiality and non-compete
as set forth in Sections 6 and 8 as applicable after termination
of employment.
(f) Termination Following a Change of Control. The Executive
shall be entitled to receive Severance Rights if, within three (3)
years following a Change in Control, there occurs any of the
following events:
(I) any termination of the Executive except for
Cause;
(II) any material reduction in the Executive's
responsibilities (including reporting
responsibilities) or authority, including as
such responsibilities or authority may be
increased from time to time;
(III) the assignment to the Executive of duties
inconsistent with the Executive's office on
the date of a Change in Control or as same
may be increased from time to time after a
Change in Control:
(IV) any reassignment of the Executive to a
location greater than fifty (50) miles from
the principal executive offices of the
Company before the Change in Control;
(V) any material reduction (including, after a
Change in Control, proportional reductions
affecting all employees or executive employees)
in the Executive's annual Base Salary in effect
on the date of a Change in Control or as same may
be increased from time to time after a Change in
Control;
(VI) any failure (including, after a Change in
Control, proportional failures affecting all
executive employees) to continue the
Executive's participation on substantially
similar terms in the Plan or any bonus plan
in which the Executive participated at the
time of the Change in Control or any change
or amendment to any substantive provisions of
any such plan which would materially decrease
the potential benefits to the Executive under
any of such plans;
(VII) any failure (including, after a Change in
Control, a proportional failure affecting all
executive employees) to provide the Executive
with benefits at least as favorable as those
enjoyed by the Executive under any of the
Company's pension, life insurance, medical,
health and accident or other
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employee plans in which the Executive participated at
the time of the Change in Control, unless such
reduction relates to a reduction in benefits
applicable to all employees generally; AND
(VIII) in the event of any of the events described
in (II) through (VII) above, the Executive
voluntarily terminates his employment under
this Agreement as a result of such event(s).
(IX) in the event of a dispute over whether the
Executive was justified in terminating his
employment on account of the events set forth
in paragraphs II through VIII, and is
therefore entitled to Severance Rights, which
dispute is resolved in favor of the
Executive, all reasonable legal fees and
costs incurred by Executive to enforce his
right to receive the Severance Rights shall
be reimbursed by Company to Executive, which
reimbursement shall be payable within fifteen
(15) days of the Company's receipt of an
invoice specifying such costs.
Additionally, the Severance Rights payment
shall be payable within fifteen (15) days
after the date the dispute is resolved in
favor of the Executive.
(g) Definitions. As used in this Section 7, the following terms shall
have the meanings set forth below:
(I) "Cause" shall mean willful misconduct,
intentional and material failure to perform
duties under this Agreement by Executive or
Executive's conviction of a felony. For purposes
of this subsection, no act or omission shall be
regarded as intentionally or willfully done
unless done or omitted to be done not in good
faith and with knowledge at the time that the act
or omission was not in the best interest of the
Company. No termination for cause shall be
effective unless and until Executive is given
written notice that the act or omission
constitutes "Cause" under this Agreement and
Executive is given an opportunity to correct or
cure the particular act or omission within sixty
(60)days after receipt by the Executive of such
written notice from the Company.
(II) A "Change in Control" shall be deemed to have taken
place if; (i.) any person, including a group but not
excluding the Company or any current stockholder of
the Company who beneficially owns five percent (5%)
or more of the Company's outstanding shares, becomes
the beneficial owner of shares of the Company having
twenty percent (20%) or more of the total number of
votes that may be cast for the election of
directors; (ii.) there occurs any cash tender or
exchange offer for shares of the Company, merger or
other business combination, sale of assets or
contested election, or any combination of the
foregoing transactions, and as a result of or in
connection with any such event persons who were
directors of the Company before the event shall
cease to constitute a majority of the Board of
Directors of the Company or any successor to
Company. As used herein, the terms "person" and
"beneficial owner" have the same meaning as under
Section 13(d) of the Securities Exchange Act of 1934
and the rules and regulations thereunder.
(III) Disability shall mean the absence of the Executive
from the Executive's usual and customary duties with
the Company for ninety (90) consecutive days as a
result of incapacity due to mental or physical
illness which a physician mutually selected by the
Executive and the Company reasonably determines in
writing will prevent the Executive
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from substantially performing all of his usual and
customary duties under this Agreement for a period
of twelve (12) consecutive months from the date of
such physician determination.
(h) Notice of Termination. Any notice of termination of
Employment Rights of Executive shall be given by the Company
in writing and delivered by hand delivery or by registered or
certified mail, return receipt requested, postage prepaid, at
the address first above written for Executive or at such other
address as Executive shall have furnished to the Company in
writing.
( i) Preservation of Rights. The Executive's right to receive
payments under this Agreement shall not decrease the amount of,
or otherwise adversely affect, any benefits payable to the
Executive under any plan, agreement or arrangement relating to
employee benefits provided by the Company.
8. Non-Competition and Non-Solicitation.
(a) Restrictions on Competition. While employed by Company under this
Agreement and for a period of one (1) year following termination of
Executive's employment hereunder, Executive agrees that he will not
directly or indirectly own an interest in, manage or control, or
provide consulting services or services as an employee or partner, to
a business engaged in managing, leasing, owning or operating assisted
living facilities, nursing homes or sub-acute operations (the
"Business Activities") within a thirty (30) mile radius of a Company
facility existing or under active development at the time of such
termination.
(b) Restriction on Solicitation. While employed by the Company under
this Agreement and for a period of one (1) year following termination
of Executive's employment hereunder, Executive agrees that he will
not: (i.) directly or indirectly solicit or encourage Company's
customers to deal with Executive or any other third party other than
the Company; or (ii.) Directly or indirectly solicit for Executive's
benefit or for the benefit of any third party the employment or
services of any then current employee of Company.
( c ) Listed Stock Ownership Exception. Nothing in this Section 8
shall prohibit Executive from owning stock in a publicly traded
company as a passive investor provided that Executive shall not own
more than 5% of the equity of a publicly traded competing enterprise
of Company's.
9. Successors.
(a) This Agreement is personal to Executive and shall not be
assignable by the Executive otherwise than by his will or
the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets
of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, the
Company shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by
operation of law or otherwise.
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10. Entire Agreement. This writing represents the entire
agreement and understanding between the parties with respect
to the subject matter contained herein and may not be altered
or amended except in a writing signed by both parties.
11. Unenforceability. If any provision of this Agreement shall
be adjudged by any court of competent jurisdiction to be
invalid or unenforceable for any reason, such judgment
shall not affect, impair or invalidate the remainder of
this Agreement.
12. Waiver. The failure of the parties to insist upon strict
compliance with any provision hereof or the failure to assert
any right the parties may have hereunder shall not be deemed
to be a waiver of such provision or right or any other
provision or right thereof by the parties.
13. Counterparts. This Agreement may be executed by the
parties in two or more counterparts, each of which shall
be deemed to be an original, but all such counterparts
shall constitute one and the same instrument.
14. Headings. The headings of the sections and subsections of
this Agreement are for convenience only and shall not control
or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
15. Governing Law. This Agreement has been negotiated and
executed within the Commonwealth of Pennsylvania and shall
be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ATTEST: BALANCED CARE CORPORATION
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxxx
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Secretary Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
