EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 26, 2002, by and between
CRITICAL HOME CARE, INC., a Nevada corporation with offices at 000 Xxxxxxx Xxxx,
Xxxxxxxxx Xxxxxx, XX 00000 (the "Corporation"), and Xxxxxxx Xxxxx ("Executive").
WITNESSETH:
WHEREAS, subject to the terms and considerations hereinafter set forth, the
Corporation wishes to employ Executive in the positions set forth herein and
Executive wishes to accept such employment.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree as follows:
Section 1. EMPLOYMENT. The Corporation hereby employs Executive and
Executive hereby accepts such employment, as an executive of the Corporation,
subject to the terms and conditions set forth in this Agreement.
Section 2. DUTIES. Executive shall serve as Executive Vice President and
Secretary of the Corporation and Director and shall properly perform such duties
as may be assigned to him from time to time by the Board of Directors. If
requested by the Board of Directors), Executive shall serve on any committee of
the Board of Directors without additional compensation. During the Term of this
Agreement, Executive shall devote substantially all of his business time and
efforts to the performance of his duties hereunder unless otherwise authorized
by the Board of Directors. Executive shall not engage in any other significant
business activity that would detract from his ability to perform services to the
Corporation.
Section 3. TERM OF EMPLOYMENT. The term of Executive's employment, unless
sooner terminated as provided herein, shall be for a period of three (3) years
commencing on the date hereof and ending on September 25, 2005 (as may be
extended from time to time, the "Term"). The Term shall be automatically
extended for successive one-year periods thereafter unless the Corporation
notifies Executive In writing of its intention not to so extend the Term at
least three (3) months prior to the end of the original or any extended Term.
Section 4. COMPENSATION OF EXECUTIVE.
4.1 BASE SALARY. Corporation shall pay bi-weekly to Executive at an annual
base salary for his services hereunder of One Hundred Twenty-Five Thousand
Dollars ($125,000), less such deductions as shall be required to be withheld by
applicable law and regulations, commencing on September 26, 2002. Executive
shall be entitled to receive a 7% increase in his base salary if the
Corporation's net income (as reported by the Corporation in its quarterly and
annual reports filed with the Securities Exchange Commission) (the "Net Income")
for the four (4) calendar quarters ending on the most recent December 31st is
greater than the Net Income for the four (4) calendar quarters ending on the
preceding December 31st. Executive's base salary, as in effect at any time, is
hereinafter referred to as the "Base Salary."
4.2 TIME OF PAYMENT. Executive's Base Salary shall be paid in substantially
equal installments on a basis consistent with the Corporation's payroll
practices for senior executives. The Corporation shall determine whether
Executive is entitled to an increase in Base Salary pursuant to Section 4.1
above as promptly as practicable after each December 31st during the Term.
4.3 ANNUAL BONUS. For each fiscal year that occurs during the Term (other
than the fiscal year ending December 31, 2002), the Corporation shall pay
Executive a cash bonus in an amount determined by the Board of Directors.
4.4 INITIAL STOCK OPTION GRANT. The Corporation agrees that as of the date
hereof, the Executive shall be granted options to acquire 75,000 shares of
common stock of the Corporation (the "Initial Options"). The Initial Options (I)
shall vest quarterly over the next year commencing on December 31, 2002 and (ii)
shall be exercisable after vesting at an exercise price equal to $1.00 per share
for the five year period following the date of grant, provided, however, that if
Executive ceases to be either an employee or director of the Corporation, the
exercise period shall be shortened in accordance with the Corporation's 2002
Stock Option Plan. "Annual Revenues" means total revenues as set forth in the
Company's annual audited financial statements filed with the Securities and
Exchange Commission filed as part of the Company's Annual Report on Form 10-K or
10-KSB (or any successor form), as amended.
4.5 EXPENSES. During the Term, the Corporation shall promptly reimburse
Executive for all reasonable and necessary travel expenses and other
disbursements incurred by Executive on behalf of the Corporation in performance
of Executive's duties hereunder, assuming Executive has received prior approval
for such travel expenses and disbursements by the Corporation to the extent
possible, consistent with corporate practice with respect to the reimbursement
of expenses incurred by the Corporation's senior executives.
4.6 BENEFITS. During the Term, Executive shall be entitled to participate
in such pension, profit sharing, group insurance, option plans, hospitalization,
and group health and benefit plans and all other benefits and plans as the
Corporation provides to its senior executives.
4.7 DEFERRAL OF COMPENSATION. Notwithstanding anything to the contrary in
this Agreement, any remuneration under this Agreement or any other agreements to
which the Corporation and Executive are parties in respect of employment that is
not deductible for any taxable year of the Corporation because of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code") will be deferred
until the first day that any excess remuneration becomes deductible under
Section 162(m) or by virtue of its repeal or amendment. Any such deferred
payment will bear interest at the prime rate plus one beginning with the date
such payment is first deferred. Notwithstanding any provision in this Agreement
to the contrary, this Section 4.8 shall survive the termination of this
Agreement.
4.8 LOANS TO EXECUTIVE. At no time during the Term may the Executive borrow
funds from the Corporation.
Section 5. TERMINATION.
5.1 DEATHS OR TOTAL DISABILITY.
(a) Death. This Agreement shall terminate upon the death of Executive;
provided, however, that the Corporation shall continue to pay to the estate
of Executive the Base Salary as set forth in Section 4.1 hereof for the
twelve (12) month period immediately subsequent to the date of Executive's
death.
(b) Total Disability. In the event Executive is discharged due to a
"Total Disability" (as defined in Section 6.1 below), then this Agreement
shall be deemed terminated and the Corporation shall be released from all
obligations to Executive with respect to this Agreement, except obligations
accrued prior to such termination and as provided in Section 6.2 hereof.
5.2 TERMINATION FOR CAUSE; EXECUTIVE'S RESIGNATION. In the event Executive
is discharged "For Cause" (as defined below) or in the event Executive resigns
(other than pursuant to Section 5.5 hereof), then upon such occurrence, this
Agreement shall be deemed terminated and the Corporation shall be released from
all obligations to Executive with respect to this Agreement, except obligations
accrued prior to such termination.
5.3 TERMINATION OTHER THAN FOR CAUSE. In the event (i) Executive is
discharged other than "For Cause" or due to his death or "Total Disability," or
(ii) the Corporation notifies Executive that the Corporation has elected to not
extend the Term of this Agreement as provided in Section 3, then the Corporation
shall pay the following amount to Executive: the product of (i) Executive's Base
Salary on the date of such termination (or, in the case of a non-extension, the
date on which the Term of this Agreement would expire after such non-extension)
plus the Cash Bonus paid (or payable) to Executive for the fiscal year ending on
the December 31 immediately preceding the date of such termination (or, in the
case of a non-extension, the date on which the Term of this Agreement would
expire after such non-extension) multiplied by (ii) the greater of (A) the
number of years (and fractions of years) remaining on the Term or (B) two. Such
amount shall be paid over a two-year period from the date of termination (or, in
the case of a non-extension, from the date on which the Term of this Agreement
would expire after such non-extension) in substantially equal installments on a
basis consistent with the payroll schedule applied to Executive during the Term
of this Agreement.
5.4 "FOR CAUSE". As used herein, the term "For Cause" shall mean:
(a) the conviction of, or pleading guilty or nolo contendere to, any
crime, whether or not involving the Corporation, constituting a felony in
the jurisdiction involved, which the Board of Directors, in its sole
discretion, determines may have an injurious effect on the Corporation;
(b) the conviction of any crime involving moral turpitude; or
(c) gross negligence or willful misconduct in the conduct of
Executive's duties or willful or repeated failure or refusal to perform
such duties as may be delegated to Executive by the Board of Directors
which are consistent with Executive's position, and that as to any conduct
concerning this subsection (c), such conduct is not corrected by Executive
within fourteen (14) days following receipt by Executive of written notice
from the Board of Directors), such notice to state with specificity the
nature of the breach, failure or refusal, gross negligence or willful
misconduct related to Executive's employment with the Corporation.
5.5 TERMINATION UPON CHANGE OF CONTROL.
(a) If, during the period commencing 120 days prior to a Change of
Control and ending on the first anniversary of a Change of Control,
Executive's employment shall have been terminated by the Corporation (other
than For Cause) or by Executive for Good Reason:
(i) all unvested options to acquire stock of the Corporation held
by Executive shall vest on the date of termination;
(ii) the Corporation shall make a lump sum cash payment to
Executive within ten (10) days of the date of termination in an amount
equal to (i) the amount of compensation that is accrued and unpaid
through the date of termination pursuant to Section 4 of this
Agreement and (ii) three (3) times the total compensation received by
Executive pursuant to Sections 4.1 and 4.3 of this Agreement for the
preceding 12-month period ending June 30.
(b) In the event that any payment (or portion thereof) to Executive
under Section 5.5(a) is determined to constitute an "excess parachute
payment," under Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended, the following calculations shall be made:
(i) The after-tax value to Executive of the payments under
Section 5.5(a) without any reduction; and
(ii) the after-tax value to Executive of the payments under
Section 5.5(a) as reduced to the maximum amount (the "Maximum Amount")
which may be paid to Executive without any portion of the payments
constituting an "excess parachute payment".
If after applying the agreed upon calculations set forth above, it is
determined that the after-tax value determined under clause (ii) above is
greater than the after-tax value determined under clause (i) above, the payments
to Executive under Section 5.5(a) shall be reduced to the Maximum Amount.
5.6 "CHANGE OF CONTROL". As used herein, the term "Change of Control" shall
mean:
(a) When any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
Section 13(d) and 14(d) thereof including a "group" as defined in Section
13(d) of the Securities and Exchange Act, but excluding the Corporation or
any subsidiary or any affiliate of the Corporation or any employee benefit
plan sponsored or maintained by the Corporation or any subsidiary of the
Corporation (including any trustee of such plan acting as trustee), becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Corporation representing a majority of the combined
voting power of the Corporation's then outstanding securities; or
(b) When, during any period of twenty-four (24) consecutive months,
the individuals who, at the beginning of such period, constitute the Board
of Directors (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority thereof provided, however, that a
director who was not a director at the beginning of such 24-month period
shall be deemed to have satisfied such 24-month requirement (and be an
Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually
(because they were directors at the beginning of such 24-month period) or
through the operation of this proviso; or
(c) The occurrence of a transaction requiring stockholder approval for
the acquisition of the Corporation by an entity other than the Corporation
or a subsidiary or an affiliated company of the Corporation through
purchase of assets, or by merger, or otherwise.
5.7 "GOOD REASON" As used herein, the term "Good Reason" shall mean the
occurrence of any of the following:
(a) the assignment to Executive, without his consent, of any duties
inconsistent in any substantial and negative respect with his positions,
duties, responsibilities and status with the Corporation as contemplated
hereunder, if not remedied by the Corporation within thirty (30) days after
receipt of written notice thereof from Executive;
(b) any removal of Executive, without his consent, from any positions
or offices Executive held as contemplated hereunder (except in connection
with the termination of Executive's employment by the Corporation For Cause
or on account of Total Disability pursuant to the requirements of this
Agreement), if not remedied by the Corporation within thirty (30) days
after receipt of written notice thereof from Executive;
(c) a reduction by the Corporation of Executive's Base Salary as in
effect as contemplated hereunder or a reduction in any formula used in
computing Executive's compensation pursuant to Section 4 of this Agreement,
except in connection with the termination of Executive's employment by the
Corporation For Cause or due to Total Disability pursuant to the
requirements of this Agreement;
(d) any termination of Executive's employment by the Corporation
during the Term that is not effected pursuant to the requirements of this
Agreement;
(e) any material breach by the Corporation of the terms of this
Agreement that is not remedied by the Corporation within thirty (30) days
after receipt of written notice thereof from Executive;
(f) the relocation of Executive's work location, without Executive's
consent, to a place more than seventy five (75) miles from the location set
forth herein; or
(g) Failure by any successor to the Corporation to expressly assume
all obligations of the Corporation under this Agreement, which failure is
not remedied by the Corporation within thirty (30) days after receipt of
written notice thereof from Executive.
Section 6. DISABILITY.
6.1 TOTAL DISABILITY. In the event that after Executive has failed, due to
a disability, to have performed his regular and customary duties for a period of
ninety (90) consecutive days or for any one hundred eighty (180) days out of any
three hundred and sixty (360) day period, and before Executive has become
"Rehabilitated" (as hereinbelow defined) a majority of the members of the Board
of Directors, exclusive of Executive, may vote to determine that Executive is
mentally or physically incapable or unable to continue to perform such regular
and customary duties of employment and upon the date of such majority vote,
Executive shall be deemed to be suffering from a "Total Disability." As used
herein, the term "Rehabilitated" shall mean such time as Executive is willing,
able and commences to devote his time and energies to the affairs of the
Corporation to the extent and in the manner that he did so prior to his
disability.
6.2 PAYMENT DURING DISABILITY. In the event Executive is unable to Perform
his duties hereunder by reason of a disability, prior to the time such
disability is deemed a Total Disability in accordance with the provisions of
Section 6.1 above, the Corporation shall continue to pay Executive his Base
Salary pursuant to Section 4.1 during the continuance of any such disability.
Upon a determination of any Total Disability pursuant to the provisions of
Section 6.1 above, the Corporation shall pay to Executive his Base Salary
Pursuant to Section 4.1 for the twelve (12) month period immediately subsequent
to the date of determination of Total Disability.
Section 7. VACATIONS.
Executive shall be entitled to a vacation of four (4) weeks per year,
during which period his Base Salary shall be paid in full. Executive shall take
his vacation at such time or times as Executive and the Corporation shall
determine is mutually convenient.
Section 8. CONFIDENTIAL INFORMATION; INVENTIONS.
(a) Executive recognizes that he has had and will continue to have
access to secret and confidential information regarding the Company,
including but not limited to its customer list, products, know-how, and
business plans. Executive acknowledges that such information is of great
value to the Company, is the sole property of the Company, and has been and
will be acquired by him in confidence. In consideration of the obligations
undertaken by the Company herein, Executive will not, at any time, during
or after his employment hereunder, reveal, divulge or make known to any
person, any information acquired by Executive during the course of his
employment, which is treated as confidential by the Company, including but
not limited to its customer list, not otherwise in the public domain, other
than in the ordinary course of business during his employment hereunder.
The provisions of this Section 8 shall survive Executive's employment
hereunder.
(b) The Company has hired the Executive to work full time so that
anything the Executive produces during the Term and in connection with his
performance under this Agreement is the property of the Company. Any
writing, invention, design, system, process, development or discovery
conceived, developed, created or made by the Executive, alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable, registrable, or
copyrightable shall become the sole and exclusive property of the Company.
(c) The Executive shall disclose the same promptly and completely to
the Company and shall, during the period of his employment hereunder and at
any time and from time to time hereafter, (i) execute all documents
requested by the Company for vesting in the Company the entire right, title
and interest in and to the same, (ii) execute all documents requested by
the Company for filing such applications for and procuring patents,
trademarks, service marks or copyrights as the Company, in its sole
discretion, may desire to prosecute, and (iii) give the Company all
assistance it may reasonably require, including the giving of testimony in
any suit, action, investigation or other proceeding.
Section 9. COVENANT NOT TO COMPETE.
(a) Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary. The parties confirm that
it is reasonably necessary for the protection of the Corporation that
Executive agree, and accordingly, Executive does hereby agree that, except
as provided in Subsection (c) below, he shall not, directly or indirectly,
at any time during the Restricted Period within the Restricted Area (as
such terms are defined in Section 9(d) below), engage in any Competitive
Business (as defined in Section 9(d) below), either on his own behalf or as
an officer, director, stockholder, partner, principal, trustee, investor,
consultant, associate, employee, owner, agent, creditor, independent
contractor, co-venturer of any third party or in any other relationship or
capacity.
(b) Executive hereby agrees that he will not, directly or indirectly,
for or on behalf of himself or any third party, at any time during the
Restricted Period (i) solicit any customers of the Corporation or (ii)
solicit, employ or engage, or cause, encourage or authorize, directly or
indirectly, to be employed or engaged, for or on behalf of himself or any
third party, any employee or agent of the Corporation or any of its
subsidiaries.
(c) This Section 9 shall not be construed to prevent Executive from
owning, directly and indirectly, in the aggregate, an amount not exceeding
one percent (1%) of the issued and outstanding voting securities of any
class of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) The term "Restricted Period," as used in this Section 9, shall
mean the period of Executive's actual employment hereunder plus twenty-four
(24) months after the date Executive is no longer employed by the
Corporation. The term "Restricted Area" as used in this Section 9 shall
mean anywhere in the world. The term "Competitive Business" as used in this
Agreement shall mean the design, manufacture, sale, marketing
or distribution of products in the Categories of products sold by, or under
license from, the Corporation or any of its affiliates.
(e) The provisions of this Section 9 shall survive the termination of
Executive's employment as provided hereunder.
Section 10. REASONABLENESS OF COVENANTS.
Executive acknowledges that he has carefully read and considered all the
terms and conditions of this Agreement, including the restraints imposed upon
him pursuant to Sections 8 and 9 hereof. Executive agrees that said restraints
are necessary for the Reasonable and proper protection of the Corporation and
its subsidiaries and affiliates, and that each and every one of the restraints
is reasonable in respect to subject matter, length of time, geographic area and
otherwise. Executive further acknowledges that, in the event any provision of
Sections 8 and 9 hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area, too great a range of activities or
otherwise, such provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law.
Section 11. MISCELLANEOUS.
11.1 ENFORCEMENT OF COVENANTS.
The parties hereto agree that Executive is obligated under this Agreement
to render personal services during the Term of a special, unique, unusual,
extraordinary and intellectual character, thereby giving this Agreement peculiar
value, and in the event of a breach of any covenant of Executive herein, the
injury or imminent injury to the value and goodwill of the Corporation's
business could not be reasonably or adequately Compensated in damages in an
action at law. Executive therefore agrees that the Corporation, in addition to
any other remedies available to it, shall be entitled to seek specific
performance, preliminary and permanent injunctive relief or any other equitable
remedy against Executive, without the posting of a bond, in the event of any
breach or threatened breach by Executive of any provision of this Agreement
(including, but not limited to the provisions of Sections 8 and 9). Without
limiting the generality of the foregoing, if Executive breaches any provision of
Section 8 or 9 hereof, such breach will entitle the Corporation to enjoin
Executive from disclosing any confidential information to any competing
business, to enjoin such competing business from receiving Executive or using
any such confidential information, and/or to enjoin Executive from rendering
personal services to or in connection with such competing business. The rights
and remedies of the parties hereto are cumulative and shall not be exclusive,
and each party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other
under this Agreement, and the enforcement of one or more of such rights and
remedies by a party shall in no way preclude such party from pursuing, at the
same time or subsequently, any and all other rights and remedies available to
it.
11.2 SEVERABILITY.
The invalidity or partial invalidity of one or more provisions of this
Agreement shall not invalidate any other provision of this Agreement. If any
portion or provision of this Agreement shall to any extent be declared illegal
or unenforceable by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
11.3 ASSIGNMENTS.
Neither Executive nor the Corporation may assign or Delegate any of their
rights or duties under this Agreement without the express written consent of the
other, except the Corporation may transfer its rights and duties in connection
with a sale of all or substantially all of its assets or in connection with a
business combination (subject to Section 5.5 hereof).
11.4 ENTIRE AGREEMENT; AMENDMENT.
This Agreement constitutes and embodies the full and complete understanding
and agreement of the parties with respect to Executive's employment by the
Corporation, supersedes all prior understandings and agreements, whether oral or
written, between Executive and the Corporation, and shall not be amended,
modified or changed except by an instrument in writing executed by Executive and
by an expressly authorized officer of the Corporation.
11.4 WAIVER.
No waiver of any provision hereof shall be effective unless made in writing
and signed by the waiving party. The failure of either party to require the
performance of any term or obligation of this Agreement, or the waiver by either
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
11.5 BINDING EFFECT.
This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective successors, heirs,
beneficiaries and permitted assigns.
11.7 HEADING.
The headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement.
11.8 NOTICES.
Any and all notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when personally delivered, sent by registered or certified mail,
return receipt requested, postage prepaid, or by private overnight mail service
(e.g. Federal Express) to the party at the address set forth above or to such
other address as either party may hereafter give notice of in accordance with
the provisions hereof. Notices shall be deemed given on the sooner of the date
actually received or the third business day after sending.
11.9 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to such State's conflicts of
laws principles and each of the parties hereto irrevocably consents to the
jurisdiction and venue of the federal and state courts located in the State of
New York, County of New York.
11.10 COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
Critical Home Care, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
