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 Xxxxx Xxxxxx ("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 Chief Executive Officer,
President and Chairman of the Corporation's Board of Directors (the "Board of
Directors") 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 Fifty
Thousand Dollars ($150,000), 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 10%
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
100,000 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:
Name: Xxxxxxx Xxxxx
Title: Secretary
____________________________________
Xxxxx Xxxxxx
