EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on March 31, 1995 by and between Charter Medical Corporation, a Delaware
Corporation ("Employer"), and Xxxxx X. XxXxxxxx ("Officer").
WHEREAS, Employer desires to obtain the continued services of Officer
and Officer desires to continue to render services to Employer; and
WHEREAS, Employer and Officer desire to set forth the terms and
conditions of Officer's employment with Employer under this Agreement; and
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements contained in this Agreement, the parties agree
as follows:
1. Term. Employer agrees to employ Officer, and Officer
agrees to serve Employer, in accordance with the terms of this Agreement,
for a term (the "Term") beginning on March 1, 1995 and ending , unless
earlier terminated in accordance with the provisions of this Agreement, on
February 28, , 2000.
2. Employment of Officer.
(a) Specific Position. Employer and Officer agree that,
subject to the provisions of this Agreement, Employer will employ Officer and
Officer will serve Employer as Executive V.P. Although Employer may, with the
consent of Officer (which consent shall not be unreasonably withheld), change
Officer's title, Employer agrees that Officer's duties hereunder shall be the
usual and customary duties of the most senior level of assistants to the Chief
Executive Officer as duly determined from time to time by the Board of Directors
of Employer (the "Board") or the Chief Executive Officer.
(b) Promotion of Employer's Business. During the Term, Officer
shall devote his full business time and energy to the business, affairs and
interests of Employer and related matters, including those permitted in Section
2 (c), and shall use his best efforts and abilities to promote Employer's
interests. Officer agrees that he will diligently endeavor to perform services
contemplated by this Agreement in accordance with the policies established by
the Chief Executive Officer and the Board.
(c) Permitted Activities. Officer may serve as an officer,
director, agent or employee of any direct or indirect subsidiary or other
affiliate of Employer but may not serve as an officer, director, agent or
employee of any other business enterprise without the written approval of the
Board or the Chief Executive Officer; provided, that Officer may make and
manage personal business investments of his choice (and, in so doing, may serve
as an officer, director, agent or employee of entities and business enterprises
that are related to such personal business investments) and serve in any
capacity with any civic, educational or charitable organization, or any
governmental entity or trade association, without seeking or obtaining such
written approval of the Board or the Chief Executive Officer, if such activities
and services do not significantly interfere or conflict with the performance of
his duties under this Agreement.
(d) Principal Office. Officer's principal office and
normal place of work shall be at Employer's principal executive offices.
3. Salary. Employer shall pay Officer a salary in the amount of
$350,000 per year (pro-rated for any partial year during the Term) payable in
equal bi-weekly installments, less state and federal tax and other legally
required and Officer-authorized withholdings. Such salary shall be subject to
review and adjustment by the Board (or a Board Committee) from time to time
consistent with past practice.
4. Benefits.
(a) Fringe Benefits. In addition to the compensation provided
for in Section 3, Officer shall be entitled during the Term of this Agreement to
such other benefits of employment with Employer as are now or may hereafter be
in effect for (i) salaried officers of Employer or (ii) senior executives of
Employer with duties comparable to those of Officer, including, without
limitation, all bonus, incentive and deferred compensation, pension, stock
option, life and other insurance, disability (insured and uninsured), medical
and dental, vacation and other benefit plans or programs consistent with those
included in the Employment Offer dated January 25, 1995, included herein as
Attachment A.
(b) Expenses. During the Term, Employer shall reimburse
Officer promptly for all reasonable travel, entertainment, parking, business
meeting and similar expenditures in pursuance and furtherance of Employer's
business upon receipt of reasonably supporting documentation as required by
Employer's policies applicable to its officers generally.
5. Termination.
(a) Termination Due to Resignation and Termination for Cause.
Officer's employment under this Agreement shall be terminated and, except as
provided in this Section 5, all of his rights to receive salary and other
benefits (except for salary, bonus and other benefits accrued on the books of
Employer through the date of termination) shall terminate upon the occurrence of
(i) Officer's resignation, or (ii) termination by Employer for "cause," as
defined below, during the Term. Employer shall have the right, exercisable upon
30 days' written notice, to terminate, without liability except for base salary
and vacation days accrued through the date of termination, Officer's employment
for "cause" if Officer (i) materially breaches any material term of this
Agreement, (ii) is convicted by a court of competent jurisdiction of a felony,
(iii)
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willfully performs his duties hereunder in a manner substantially detrimental to
the business of the Employer, (iv) intentionally engages in illegal conduct
substantially detrimental to the business or reputation of Employer, or (v)
develops or pursues interests substantially adverse to Employer.
(b) Termination Due to Death or Disability. Officer's
employment and all of his rights to receive salary and other benefits under this
Agreement, may be terminated by Employer upon Officer's death, or 30 days'
written notice from Employer to Officer, if Officer has been unable to perform
substantially all of his duties under this Agreement for a period of 180 days,
or can reasonably be expected to be unable to do so for such period, as the
result of physical or mental impairment; provided that upon any termination
pursuant to his Section 5 (b) , Officer (or in the event of his death, his
estate) shall be entitled to receive the Specified Amount (as defined below),
and such Specified Amount shall be payable in a lump sum on the date of
termination. In addition to the Specified Amount, if Officer is terminated due
to death or disability, Officer (or in the event of his death, his estate) shall
be entitled to receive the portion or portions of any bonus or other cash
incentive compensation that had been accrued on the books of Employer through
the date of termination pursuant to this Section 5 (b) with respect to Officer.
The term "Specified Amount" shall mean the greater of (i) the
total of all salary payments pursuant to Section 3 that would thereafter have
come due during the Term had there been no such termination or resignation or
(ii) two years' salary pursuant to Section 3, (in each case as the Term may have
been extended and assuming a continuation for the remainder of the Term of then
current salary levels).
(c) Termination Without Cause. Subject to compliance with the
provisions of Section 5 (d), Employer shall have the right, exercisable upon 30
days' written notice, to terminate Officer's employment under this Agreement
without cause at any time during the Term.
(d) Payments Upon Termination Without Cause. If Officer is
terminated by Employer without cause pursuant to Section 5 (c), Officer (i)
shall be entitled to receive the Specified Amount as defined in Section 5 (b) in
cash on the date of such termination subject to the provisions of Section 5 (f);
(ii) any stock option or other stock-based compensation plan shall be governed
by the terms of such plans (and any related stock option or similar agreements);
and (iii) the portion or portions of any bonus or other cash incentive
compensation that had been accrued on the books of Employer through the date of
termination pursuant to this Section 5 (d) with respect to Officer shall be paid
to Officer in cash on the date of such termination.
(e) Termination Upon a Change of Control. Officer shall be
entitled to terminate his employment upon a change of control and shall be
entitled to all of the salary, benefits and other rights provided in this
Agreement (including those payments provided under Section 5 (d) as though the
termination has been initiated by Employer without cause upon the
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occurrence of any of the following events: (a) the acquisition after the
beginning of the Term in one or more transactions, of beneficial ownership
(within the meaning of Rule 13d-3 (a) (1) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) by any person or entity (other than
Officer or Xxxxx X. Xxxxxxxx) or any group of persons or entities (other than
Officer) who constitute a group (within the meaning of Xxxxxxx 00 (x) (0) xx xxx
Xxxxxxxx Xxx) of any securities of Employer such that as a result of such
acquisition such person or entity or group beneficially owns (within the meaning
of Rule 13d-3 (a) (1) under the Exchange Act) more than 50% of Employer's then
outstanding voting securities entitled to vote on a regular basis for a majority
of the Board; or (b) the sale of all or substantially all of the assets of
Employer (including, without limitation, by way of merger, consolidation, lease
or transfer) in a transaction (except for a sale-leaseback transaction) where
Employer or the holders of common stock of Employer do not receive (i) voting
securities representing a majority of the voting power entitled to vote on a
regular basis for the Board of Directors of the acquiring entity or of an
affiliate which controls the acquiring entity, or (ii) securities representing a
majority of the equity interest in the acquiring entity or of an affiliate that
controls the acquiring entity, if other than a corporation; provided, that if
Officer becomes entitled to any payments (whether hereunder or otherwise) by
reason of an event described in Internal Revenue Code Section 280G(b) (2) (A)
(i) (a "Parachute Event") that would constitute "parachute payments" (as defined
in Internal Revenue Code Section 280G(b) (G(2) (A)) if paid, then Officer's
entitlement to such payments shall be reduced by such amount as will cause none
of such payments to constitute parachute payments if, and only if, the net
amount received by Officer by reason of the Parachute Event, after imposition of
all applicable taxes (including taxes under Internal Revenue Code Section 4099),
would be greater after such reduction than if such reduction were not made.
(f) In the event that Officer is terminated without cause and
in the event that Officer's salary has been reduced to an amount less than
$350,000 per year, the calculation of any amounts due under Section 5 (d) (i)
shall be calculated using a base salary of $350,000 per year (pro-rated for any
partial year during the Term).
6. Confidentiality and Noncompetition.
(a) Confidentiality. Officer acknowledges that, by reason of
his employment with Employer, he may learn trade secrets and obtain other
confidential information concerning the business and policies of Employer and
its subsidiaries. Officer agrees that, during and after the end of the Term, he
will not voluntarily divulge or otherwise disclose, directly or indirectly, any
such trade secrets or other confidential information concerning the business or
policies of Employer or any of its subsidiaries that he may learn as a result of
his employment during the Term or may have learned prior to the Term, except to
the extent such information is lawfully obtainable from public sources or such
use or disclosures is (i) necessary to the performance of this Agreement and in
furtherance of Employer's best interests, (ii) required by applicable laws, or
(iii) authorized by Employer.
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(b) Noncompetition. In order to protect any confidential
information that Officer may learn during the Term and in order to protect any
goodwill that Employer has earned and may earn during the Term, Officer agrees
that, if Officer voluntarily terminates this Agreement during the Term, he shall
not, at any location it the State of Georgia, for a period of 12 months after
such termination, provide services, as employee, officer, director, consultant
or otherwise, for any company, firm or entity that owns and operates (directly
or through subsidiaries) more than one behavioral healthcare, psychiatric or
substance abuse hospital or facility (each, a "Facility") and that owns and
operates one or more facilities located in Georgia within 25 miles of a
generally similar facility (except for size of facility) owned and operated by
Employer or a subsidiary and located within the State of Georgia.
7. Miscellaneous.
(a) Succession. This Agreement shall inure to the benefit of
and shall be binding upon Employer, its successors and assigns, but Employer
shall not have the right to assign this Agreement without the prior written
consent of Officer. The obligations and duties of Officer under this Agreement
shall be personal and not assignable.
(b) Notices. Any notice, request, instruction or other
document to be given under this Agreement by any party to the others shall be in
writing and delivered in person or by courier, telegraphed, telexed or sent by
facsimile transmission or mailed by certified mail, postage prepaid, return
receipt requested (such mailed notice to be effective on the date of such
receipt is acknowledged), as follows:
If to Officer:
Xxxxx X. XxXxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to Employer:
Charter Medical Corporation
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Secretary
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
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(c) Entire Agreement. This Agreement contains the
entire agreement of the parties relating to the subject matter of this
Agreement, and it replaces and supersedes any prior agreements between the
parties relating to said subject matter.
(d) Waiver; Amendment. No provision of this Agreement may be
waived except by a written agreement signed by the waiving party. The waiver of
any term or of any condition of this Agreement shall not be deemed to constitute
the waiver of any other term or condition. This Agreement may be amended only by
a written agreement signed by the parties.
(e) Governing Law. This Agreement shall be construed
under and governed by the internal laws of the State of Georgia.
(f) Arbitration. Except for an action for injunctive relief,
any disputes or controversies arising under this Agreement shall be settled by
arbitration in Atlanta, Georgia in accordance with the rules of the American
Arbitration Association relating to the arbitration of commercial disputes. The
determination and findings of such arbitrators shall be final and binding on all
parties and may be enforced, if necessary, in the courts of the State of
Georgia.
(g) Attorneys' Fees in Action by Employee on Contract. In the
event of litigation or arbitration between Officer and Employer arising out of
or as a result of this Agreement or the acts of the parties pursuant to this
Agreement, or seeking an interpretation of this Agreement, if Officer is the
prevailing party in such litigation or arbitration, in addition to any other
judgment or award, he shall be entitled to receive such sums as the court or
panel hearing the matter shall find to be reasonable as and for attorneys' fees.
(h) Remedies of Employer. Officer acknowledges that the
services he is obligated to render under the provisions of this Agreement are of
a special, unique and intellectual character, which gives this Agreement
peculiar value to Employer. The loss of these services cannot be reasonably or
adequately compensated in damages in an action at law and it would be difficult
(if not impossible) to replace such services. Accordingly, Officer agrees and
consents that, if he materially violates any of the material provisions of this
Agreement, including, without limitation, Section 6, Employer, in addition to
any other rights and remedies available under this Agreement or under applicable
law, shall be entitled during the remainder of the Term (and, in the case of
Section 6, after the Term to the extent provided in Section 6) to injunctive
relief, from a court of competent jurisdiction, restraining Officer from
committing or continuing any violation of this Agreement, or from the
performance of services to any other business entity in violation of this
Agreement, or both.
(i) Captions. Captions have been inserted solely for
the convenience of reference and in no way define, limit or describe the scope
or substance of any provisions of this Agreement.
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(j) Severability. If this Agreement shall be any reason be or
become unenforceable by any party, this Agreement shall thereupon terminate and
become unenforceable by the other party as well. In all other respects, if any
provision of this Agreement is held invalid or unenforceable, the remainder of
this Agreement shall nevertheless remain in full force and effect and, if any
provision if held invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
CHARTER MEDICAL CORPORATION
By: /s/ Xxxxx X.XxXxxxxx
-----------------------
Name: Xxxxx X. XxXxxxxx
Title:
\mcknigh.fnl
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