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Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made as of the 1st
day of January, 1997, between RES-CARE, INC., a Kentucky corporation (the
"Company"), and XXXXXXX X. XXXXX (the "Employee").
RECITALS:
WHEREAS, the Employee has been employed by the Company since September 1,
1989, and the services of the Employee, his managerial experience, and his
knowledge of the affairs of the Company are of great value to the Company;
WHEREAS, the Employee possesses an intimate knowledge of the business and
affairs of the Company, its policies, methods, personnel and plans for the
future; and
WHEREAS, the Board of Directors of the Company recognizes that the
Employee's contribution to the growth and success of the Company has been
substantial and wishes to offer an inducement to the Employee to remain in the
employ of the Company.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
1. Employment and Term. The Company hereby employs the Employee, and the
Employee accepts such employment, upon the terms and conditions herein set forth
for an initial term commencing on January 1, 1997, and ending on December 31,
1999, subject to earlier termination only in accordance with the express
provisions of this Employment Agreement ("Initial Term"). This Employment
Agreement shall be automatically extended on a year-to-year basis (January 1
through December 31 of each successive year), unless sooner terminated in
accordance with the express provisions of this Employment Agreement ("Additional
Terms"), upon the expiration of the Initial Term or any Additional Term, unless
prior to the commencement of a sixty (60) day period expiring at the end of such
Initial Term or any Additional Term, the Company or the Employee shall have
given written notice to the other stating that the term of this Employment
Agreement shall not be extended. For purposes of this Employment Agreement, the
term "Term" shall mean the Initial Term plus all Additional Terms.
2. Duties.
(a) Employment as Executive Vice President of Operations. During the
Term, the Employee shall serve as the Executive Vice President of Operations for
the Division for Persons with Disabilities of the Company. The Employee shall,
subject to the supervision and control of the President and Chief Executive
Officer of the Company (the "President") and the Board of Directors of the
Company (the "Board"), perform such duties and exercise such powers
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over and with regard to the business of the Company's Division for Persons with
Disabilities as are presently being performed and exercised by him and such
additional duties which are similar in nature and responsibility to those
presently being performed by the Employee as may be prescribed from time to time
by the President or the Board, including, without limitation, serving as an
officer of one or more subsidiaries or affiliates of the Company, if elected to
such positions, without any further salary or other compensation.
(b) Time and Effort. The Employee shall devote all of his business
time, energies and talents exclusively to the business of the Company and to no
other business during the Term of this Employment Agreement; provided, however,
that subject to the restrictions in Section 7 hereof, the Employee may (i)
invest his personal assets in such form or manner as will not require his
services in the operation of the affairs of the entities in which such
investments are made and (ii) subject to satisfactory performance of the duties
described in Section 2(a) hereof, devote such time as may be reasonably required
for him to continue to maintain his current level of participation in various
civic and charitable activities.
3. Compensation.
(a) Base Salary. The Company shall pay to the Employee during the
Term a fixed, annual salary (the "Base Salary"), which initially shall be
$150,000. The Base Salary shall be due and payable in substantially equal
bi-weekly installments or in such other installments as may be necessary to
comport with the Company's normal pay periods for all employees.
Provided that this Employment Agreement or Employee's employment hereunder
shall not have been terminated for any reason, the Base Salary shall be
increased, effective as of the first day of each year of the Term, in proportion
to the increase in the Consumer Price Index "All-Items" category, as published
by the Bureau of Labor Statistics (the "CPI") established for the month of
December immediately preceding the date on which the adjustment is to be made
over that established for the month of December 1996. If the Bureau of Labor
Statistics suspends or terminates its publication of the CPI, the parties agree
that a reasonably comparable price index shall be substituted for the CPI.
(b) Annual Bonus Plan. The Employee shall participate with the other
executive officers of the Company in the Annual Bonus Plan established by the
Board, and in connection therewith shall be eligible for an annual bonus of up
to twenty-five percent (25%) of his Base Salary (as adjusted by the CPI for the
calendar year for which the bonus is determined), in accordance with and based
upon the mutually agreeable performance goals established for the Employee by
the President and the Employee and as such Annual Bonus Plan shall be modified
by the Board from time to time.
(c) Participation in Benefit, Insurance, Vacation and Sick Leave
Plans. Employee shall be entitled to participate in the standard Company benefit
package which is to be implemented generally as reflected in Company's Flex-Care
Employee guide currently in
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effect, as modified by the Company from time to time. Employee acknowledges that
the Company is in the process of modifying its Flex-Care Plan. During the
Initial Term and each Additional Term, Employee will be entitled to three (3)
weeks of vacation, which vacation may be utilized as earned. Employee will
accrue ten (10) days of sick leave for each year of employment. The Employer
reserves the right to amend or modify in their entirety or any of the
above-mentioned fringe benefit programs.
(d) Participation in Stock Option Plan. Employee shall be entitled
to participate in the Company stock option plan which is applicable to its
managerial employees. Provided Employee continues to be employed hereunder, on
the fourth (4th) Thursday of each February commencing in 1998, Employee shall be
granted options to purchase 25,000 shares of Company common stock (with such
maximum number of shares to be equitably adjusted for stock splits, stock
dividends, recapitalizations and the like) for the preceding calendar year.
Provided Employee shall continue to be employed hereunder, any stock options
granted to Employee pursuant to this paragraph (d) shall vest and be exercisable
immediately on the date of grant and such options shall have an exercise price
based upon the closing sale price of Company common stock as reported on the
NASDAQ National Market System on the respective date of grant.
(e) Participation in Retirement and Profit Sharing Plans. Employee
shall continue to be eligible to participate in any retirement and/or profit
sharing plans applicable to the Company's managerial employees, as modified by
the Company from time to time.
(f) Out-of-Pocket Expenses. The Company shall promptly pay the
ordinary, necessary and reasonable expenses incurred by Employee in the
performance of Employee's duties hereunder (or if such expenses are paid
directly by Employee shall promptly reimburse him for such payment), consistent
with the reimbursement policies adopted by the Board from time-to-time.
Provided, however, such payment or reimbursement shall be subject to prior
written approval by the President.
(g) Withholding of Taxes; Income Tax Treatment. If, upon the payment
of any compensation or benefit to the Employee under this Employment Agreement
(including, without limitation, in connection with the exercise of any option),
the Company determines in its discretion that it is required to withhold or
provide for the payment in any manner of taxes, including but not limited to,
federal income or social security taxes, state income taxes or local income
taxes, the Employee agrees that the Company may satisfy such requirement by:
(i) withholding an amount necessary to satisfy such
withholding requirement from the Employee's compensation or benefit; or
(ii) conditioning the payment or transfer of such compensation
or benefit upon the Employee's payment to the Company of an amount
sufficient to satisfy such withholding requirement.
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The Employee agrees that he will treat all of the amounts payable pursuant to
this Employment Agreement as compensation for income tax purposes.
4. Termination. The Employee's employment hereunder may be terminated
under this Employment Agreement as follows, subject to the Employee's rights
pursuant to Section 5 hereof:
(a) Death. The Employee's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been absent from his duties
hereunder on a full-time basis for 180 consecutive calendar days, and within
thirty (30) days after written Notice of Termination is given (which may occur
no earlier than thirty (30) days before, but at any time after, the end of such
180- day period), the Employee shall not have returned to the performance of his
duties hereunder on a full-time basis, the Company may terminate the Employee's
employment hereunder.
(c) Cause. The Company may terminate the Employee's employment
hereunder for Cause. For purposes of this Employment Agreement, the Company
shall have "Cause" to terminate the Employee's employment because of the
Employee's personal dishonesty, intentional misconduct, breach of fiduciary duty
involving personal profit, failure to perform his duties hereunder, conviction
of, or plea of nolo contendere to, any law, rule or regulation (other than
traffic violations or similar offenses) or breach of any provision of this
Employment Agreement.
(d) Without Cause. By appropriate action of the Board, the Company
shall have the right to terminate the Employee's employment under this
Employment Agreement at any time without Cause (as defined in Subsection 4(c)).
(e) Voluntary Termination. By not less than thirty (30) days prior
written notice to the President, Employee may voluntarily terminate his
employment hereunder.
(f) Notice of Termination. Any termination during the term of this
Employment Agreement of the Employee's employment hereunder (other than
termination pursuant to Section 4(a) above) shall be communicated by written
Notice of Termination to the Employee hereto (except in the case of termination
as described in Section 4(e) above written Notice of Termination shall be
delivered by the Employee). For purposes of this Employment Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Employment Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated.
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(g) Date of Termination. The "Date of Termination" shall, for
purposes of this Employment Agreement, mean: (i) if the Employee's employment is
terminated by his death, the date of his death; (ii) if the Employee's
employment is terminated on account of disability pursuant to Section 4(b)
above, thirty (30) days after Notice of Termination is given (provided that the
Employee shall not, during such 30-day period, have returned to the performance
of his duties on a full-time basis), (iii) if the Employee's employment is
terminated by the Company for Cause pursuant to Section 4(c) above, the date
specified in the Notice of Termination, (iv) if the Employee's employment is
terminated by the Employer without Cause, pursuant to Section 4(d) above, thirty
(30) days after Notice of Termination is given, (v) if the Employee's employment
is terminated voluntarily pursuant to Section 4(e) above, the date specified in
the Notice of Termination, and (vi) if the Employee's employment is terminated
by reason of an election by either party not to extend the Term, the last day of
the then effective Term.
5. Compensation upon Termination or During Disability.
(a) Death. If the Employee's employment shall be terminated by
reason of his death, the Employee shall continue to receive his full Base Salary
until the date of his death and a Cash Bonus, prorated based upon the number of
full months that have elapsed from the immediately preceding January 1 until the
date of his death (plus any earned but unpaid Cash Bonus for a prior period).
(b) Disability. During any period that the Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, the Employee shall continue to receive his full Base Salary until the
Date of Termination and shall be entitled to receive a Cash Bonus, prorated
based upon the number of full months that have elapsed from the immediately
preceding January 1 until the Date of Termination (plus any earned but unpaid
Cash Bonus for a prior period). Upon termination due to death prior to a
termination as specified in the preceding sentence, Section 5(a) above shall
apply.
(c) Cause. If the Employee's employment shall be terminated for
Cause, the Company shall, through the Date of Termination, continue to pay the
Employee his full Base Salary but the Employee shall not be entitled to receive
a Cash Bonus (other than any earned but unpaid Cash Bonus for a prior period),
and shall not be eligible for any severance payment of any nature.
(d) Without Cause. If the Employee's employment shall be terminated
without Cause, and such Notice of Termination shall have been given after a
Change of Control (as defined below) shall be applicable to the Company, the
Employee shall continue to receive his full Base Salary until the Date of
Termination and for one (1) year after the Date of Termination. In all other
cases in which the Employee's employment shall be terminated without Cause, the
Employee shall continue to receive his full Base Salary until the Date of
Termination and for six (6) months after the Date of Termination. In all cases
in which Employee's employment shall be terminated without Cause, the Employee
shall also be entitled
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to receive a Cash Bonus, prorated based upon the number of full months that have
elapsed from the immediately preceding January 1 until the Date of Termination
(plus any earned but unpaid Cash Bonus for a prior period). A "Change of
Control" shall be applicable to the Company --
(i) if any person shall acquire more than fifty percent (50%)
of the common capital stock of the Company through a tender offer,
exchange offer or otherwise;
(ii) if the Company shall be a party to a binding agreement to
any merger, consolidation or reorganization in which any person who on the
date hereof does not own more than ten percent (10%) of the issued and
outstanding common capital stock of the Company acquires, beneficially or
of record, more than fifty percent (50%) of such stock; or
(iii) there shall be a sale of all or substantially all of the
assets of the Company.
(e) Expiration of Term. If the Employee's employment shall be
terminated by reason of expiration of the Term (irrespective of which party
elected not to extend the Term), the Company shall, through the Date of
Termination, continue to pay the Employee his full Base Salary and the Company
shall pay the Employee his Cash Bonus for the last calendar year of the Term.
(f) Voluntary Termination. If the Employee's employment shall be
terminated pursuant to Section 4(e) hereof, the Company shall, through the Date
of Termination, continue to pay the Employee his full Base Salary but the
Employee shall not be entitled to receive a Cash Bonus (other than any earned
but unpaid Cash Bonus for a period), and shall not be entitled to any severance
payment of any nature.
(g) No Further Obligations after Payment. After all payments, if
any, have been made to the Employee pursuant to any of paragraphs (a) through
(f) of this Section 5, the Company shall have no further obligations to the
Employee under this Employment Agreement other than the provision of any
employee benefits required to be continued under applicable law.
6. Duties Upon Termination. Upon the termination of Employee's employment
hereunder for any reason whatsoever (including but not limited to the failure of
the parties hereto to agree to the extension of this Employment Agreement
pursuant to Section 2 hereof), Employee shall promptly return to the Company any
Confidential Information (as defined in Section 7(c)(ii) hereof) and whether or
not constituting Confidential Information, any technical data, performance
information and reports, sales or marketing plans, documents or other records,
rolodexes, and any manuals, drawings, tape recordings, computer programs, discs,
and any other physical representations of any other information relating to the
Company, its subsidiaries or affiliates or to the Business (as defined in
Section 7(c)(iii) hereof) of the Company. Employee hereby acknowledges that any
and all of such documents, items, physical
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representations and information area and shall remain at all times the exclusive
property of the Company.
7. Restrictive Covenants.
(a) Acknowledgments. Employee acknowledges that (i) his services
hereunder are of a special, unique and extraordinary character and that his
position with the Company places him in a position of confidence and trust with
the operations of the Company, its subsidiaries and affiliates (collectively,
the "Res-Care Companies") and allows him access to Confidential Information,
(ii) the Company has provided Employee with a unique opportunity as its
Executive Vice President of Operations for the Division for Persons with
Disabilities, (iii) the nature and periods of the restrictions imposed by the
covenants contained in this Section 7 are fair, reasonable and necessary to
protect and preserve for the Company the benefits of Employee's employment
hereunder, (iv) the Res-Care Companies would sustain great and irreparable loss
and damage if Employee were to breach any of such covenants, (v) the Res-Care
Companies conduct and are aggressively pursuing the conduct of their business
actively in and throughout the entire Territory (as defined in paragraph (d)(i)
of this Section 7), and (vi) the Territory is reasonably sized because the
current Business of the Res-Care Companies is conducted throughout such
geographical area, the Res-Care Companies are aggressively pursuing expansion
and new operations throughout such geographic area and the Res-Care Companies
require the entire Territory for profitable operations.
(b) Confidentiality Covenant. Having acknowledged the foregoing,
Employee covenants that without limitation as to time, he will not directly or
indirectly disclose or use or otherwise exploit for his own benefit, or the
benefit of any other person, except as may be necessary in the performance of
his duties hereunder, any Confidential Information.
(c) Covenants. Having acknowledged the statements in Section 7(a)
hereof, Employee covenants and agrees with the Res-Care Companies that he will
not, directly or indirectly, from the date hereof until the Date of Termination
of Employee's employment hereunder, and for a period of one (1) year thereafter,
directly or indirectly (i) solicit, divert or appropriate to himself or any
other person, any business or services (similar in nature to the Business) of
any person who was an employee or an agent of any of the Res-Care Companies at
any time during the last twelve (12) months of Employee's employment hereunder;
or (ii) own, manage, operate, join, control, assist, participate in or be
connected with, directly or indirectly, as an officer, director, shareholder,
partner, proprietor, employee, agent, consultant, independent contractor or
otherwise, any person which is, at the time, directly or indirectly, in
competition within the Territory with the Business of the Res-Care Companies.
(d) Definitions. For purposes of this Employment Agreement:
(i) For purposes of this Section 7, "termination of Employee's
employment" shall include any termination pursuant to paragraphs (b), (c),
(d) and (e) of Section 5 hereof, the termination of such Employee's
employment by reason of the failure of the
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parties hereto to agree to the extension of this Agreement pursuant to
Section 2 hereof or the voluntary termination of Employee's employment
hereunder.
(ii) The "Territory" shall mean the forty-eight (48)
contiguous states of the United States, the United States Virgin Islands
and Puerto Rico.
(iii) "Confidential Information" shall mean any business
information relating to the Res-Care Companies or to the Business (whether
or not constituting a trade secret), which has been or is treated by any
of the Res-Care Companies as proprietary and confidential and which is not
generally known or ascertainable through proper means. Without limiting
the generality of the foregoing, so long as such information is not
generally known or ascertainable by proper means and is treated by the
Res-Care Companies as proprietary and confidential, Confidential
Information shall include the following information regarding any of the
Res-Care Companies:
(1) any patent, patent application, copyright,
trademark, trade name, service xxxx, service name,
"know-how" or trade secrets;
(2) customer lists and information relating to (i) any
client of any of the Res-Care Companies or (ii)
any client of the operations of any other person
or entity for which operations any of the Res-Care
Companies provides management services;
(3) supplier lists, pricing policies, consulting
contracts and competitive bid information;
(4) records, operational methods and Company policies
and procedures, including manuals and forms;
(5) marketing data, plans and strategies;
(6) business acquisition, development, expansion or
capital investment plan or activities;
(7) software and any other confidential technical
programs;
(8) personnel information, employee payroll and
benefits data;
(9) accounts receivable and accounts payable;
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(10) other financial information, including financial
statements, budgets, projections, earnings and any
unpublished financial information; and
(11) correspondence and communications with outside
parties.
(iv) The "Business" of the Res-Care Companies shall mean the
business of providing juvenile treatment or services, services to persons
with mental retardation and other developmental disabilities, including
but not limited to persons who have been dually diagnosed, services to
persons with acquired brain injuries, training services, or providing
management and/or consulting services to third parties relating to the
foregoing.
(v) The term "person" shall mean an individual, a partnership,
an association, a corporation, a trust, an unincorporated organization, or
any other business entity or enterprise.
(e) Injunctive Relief, Invalidity of any Provision. Employee
acknowledges that his breach of any covenant contained in this Section 7 will
result in irreparable injury to the Res-Care Companies and that the remedy at
law of such parties for such a breach will be inadequate. Accordingly, Employee
agrees and consents that each of the Res-Care Companies in addition to all other
remedies available to them at law and in equity, shall be entitled to seek both
preliminary and permanent injunctions to prevent and/or halt a breach or
threatened breach by Employee of any covenant contained in this Section 7. If
any provision of this Section 7 is invalid in part or in whole, it shall be
deemed to have been amended, whether as to time, area covered, or otherwise, as
and to the extent required for its validity under applicable law and, as so
amended, shall be enforceable. The parties further agree to execute all
documents necessary to evidence such amendment.
8. Entire Agreement; Modification; Waiver. This Employment Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Employment Agreement shall be binding unless executed in
writing by all parties hereto (other than as provided in the next to last
sentence of Section 7(e) hereof). No waiver of any of the provisions of this
Employment Agreement will be deemed, or will constitute, a waiver of any other
provision, whether or not similar, nor will any waiver constitute a continuing
waiver. No waiver will be binding unless executed in writing by the party making
the waiver.
9. Successors and Assigns; Assignment. This Employment Agreement shall be
binding on, and inure to the benefit of, the parties hereto and their respective
heirs, executors, legal representatives, successors and assigns; provided,
however, that this Employment Agreement is intended to be personal to the
Employee and the rights and obligations of the Employee hereunder may not be
assigned or transferred by him.
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10. Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Employment Agreement, or
any other agreement executed in connection therewith, shall be in writing and
shall be deemed to have been given on the date of delivery personally or upon
deposit in the United States mail postage prepaid by registered or certified
mail, return receipt requested, to the appropriate party or parties at the
following addresses (or at such other address as shall hereafter be designated
by any party to the other parties by notice given in accordance with this
Section ):
To the Company:
Res-Care, Inc.
00000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx,
President and Chief Executive Officer
To the Employee:
Xxxxxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
11. Execution in Counterparts. This Employment Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
12. Further Assurances. The parties each hereby agree to execute and
deliver all of the agreements, documents and instruments required to be executed
and delivered by them in this Employment Agreement and to execute and deliver
such additional instruments and documents and to take such additional actions as
may reasonably be required from time to time in order to effectuate
the transactions contemplated by this Employment Agreement.
13. Severability of Provisions. The invalidity or unenforceability of any
particular provision of this Employment Agreement shall not affect the other
provisions hereof and this Employment Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.
14. Governing Law. This Employment Agreement is executed and delivered in,
and shall be governed by, enforced and interpreted in accordance with the laws
of, the Commonwealth of Kentucky.
15. Tense; Captions. In construing this Employment Agreement, whenever
appropriate, the singular tense shall also be deemed to mean the plural, and
vice versa, and the captions contained in this Employment Agreement shall be
ignored.
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16. Survival. The provisions of Sections 5, 6 and 7 hereof shall survive
the termination, for any reason, of this Employment Agreement, in accordance
with their terms.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the day and year set forth above.
RES-CARE, INC.
By: _____________________________________________
Xxxxxx X. Xxxxx
President and Chief Executive Officer
_________________________________________________
Xxxxxxx X. Xxxxx
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