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Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of January 31, 2001 (together with the exhibits
attached hereto and made a part hereof, the "Agreement") is made by and between
BALANCED CARE CORPORATION, a Delaware corporation with a principal office at
0000 Xxxxx Xxxxx, Xxxxxxxxxxxxx, XX 00000, on behalf of it and each of its
subsidiaries (the "Company") and XXXX X. XXXXXXXXX, an individual residing at
0000 Xxxx Xxxx Xxxx, Xxxxxxxxxxxxx, XX 00000 (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to retain the services of Employee as Chairman
of its Board of Directors and its Chief Executive Officer for the benefit of
itself and each of its Subsidiaries (as hereafter defined) throughout the term
of this Agreement, and Employee is willing to be employed by the Company in the
foregoing capacities for such period, upon the terms and conditions herein set
forth.
WHEREAS, the Company and Employee are parties to an employment agreement
dated as of August 1, 1996 (the "Original Employment Agreement"), as amended by
a first amendment to employment agreement dated as of December 4, 1999 (the
"First Amendment"), as further amended a second amendment to employment
agreement dated as of December 4, 2000 (the "Second Amendment" and, together
with the First Amendment and the Original Employment Agreement, the "Employment
Agreement"), which Employment Agreement is superseded in its entirety by this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Employment and Signing Bonus. The Company hereby employs Employee and
Employee hereby accepts employment by the Company subject to all the terms
and conditions hereafter set forth. Employee, in addition to the
compensation and
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other benefits set forth in this Agreement, shall, upon execution of this
Agreement and as further consideration for this Agreement, be entitled to a
cash payment of $500,000, which payment shall be due and payable
immediately upon execution of this Agreement.
2. Capacity. Employee shall serve as Chairman of the Board and Chief Executive
Officer and President of each subsidiary (each a "Subsidiary") of the
Company, whether in existence at the time this Agreement is executed or
formed thereafter.
3. Duties. During the Term of this Agreement, Employee shall devote his
business attention and best efforts to the performance of duties
customarily performed by the Chairman of the Board and Chief Executive
Officer of the Company, and, with respect to each Subsidiary, by the Chief
Executive Officer and President of each such Subsidiary, together with such
other duties, not inconsistent with duties typically and customarily
performed by the chairman of the board of directors and chief executive
officer of comparable companies, as Employee may be requested to perform by
the Board of Directors, in its sole discretion.
4. Term of Employment. Unless earlier terminated as hereafter provided, this
Agreement shall commence on January 31, 2001 and shall expire on January
30, 2004, provided that upon expiration of such term, this Agreement shall
be extended until January 30, 2005 (the "First Renewal Term") without
further action on the part of the parties hereto, unless either party gives
written notice of termination to the other party at least ninety (90) days
prior to the expiration of the current term. Upon expiration of the First
Renewal Term, this agreement shall be extended until January 30, 2006 (the
"Second Renewal Term") without further action on the part of the parties
hereto, unless either party gives written notice of termination to the
other party at least ninety (90) days prior to the expiration of the First
Renewal Term.
5. Termination.
(a) Death. The employment of Employee under this Agreement shall
immediately terminate upon the death of Employee and the Company shall
have no further obligations or liabilities to Employee, except to the
extent of any
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employee benefit plans or practices of the Company required by law.
(b) Disability. In the event Employee becomes Disabled (as hereafter
defined), the Company may elect to terminate the employment of
Employee and make claim on his behalf with respect to an insurance
policy purchased as provided below in Subsection 6(e). For the
purposes of this Agreement, Employee shall be "Disabled" if Employee
is absent from his duties for medical reasons for a period of three
(3) months.
(c) Termination Without Cause. If the Company terminates Employee without
cause on or before July 30, 2002, Employee shall be entitled to a cash
payment of $500,000, due and payable within 10 business days of such
termination. If the employment of the Employee is terminated without
cause after July 30, 2002 but before January 30, 2004, Employee shall
be entitled to a cash payment (due and payable within 10 business days
following his termination of employment) in an amount equal to the
product determined by multiplying by three (3) the annual cash
compensation of the Employee at the rate then in effect under
Subsection 6(a) hereof. If the term of this Agreement is renewed
pursuant to Section 4 hereof and the employment of Employee is
terminated without cause after January 30, 2004 but before the
expiration of either the First Renewal Term or the Second Renewal
Term, Employee shall be entitled to a cash payment (due and payable
within 10 business days following his termination of employment) in an
amount equal to the annual cash compensation of the Employee at the
rate stipulated in Subsection 6(a)(iii) hereof. Upon the payment to
Employee of any amount under this Subsection 5(c), the Company shall
have no further obligations or liabilities to Employee under this
Agreement. Without limiting the foregoing, in the event of such
termination and payment, the Company shall have no obligations under
Section 6 of this Agreement.
(d) Voluntary Resignation or Retirement. If Employee voluntarily resigns
from employment or chooses to retire from active service with the
Company, the employment of Employee shall terminate on the effective
date of his resignation or retirement and the Company
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shall have no further obligations or liabilities to Employee except to
the extent required by law.
6. Compensation.
(a) Cash Compensation. During the term of this Agreement, as compensation
for services to the Company, the Company shall pay to Employee a base
salary, in semi-monthly cash instalments, in the respective amounts as
follows:
(i) for the period beginning January 31, 2001 and ending January 30,
2002, an annual base salary of $250,000;
(ii) for the period beginning January 31, 2002 and ending January 30,
2003, an annual base salary of $275,000; and
(iii) for the period beginning January 31, 2003 and ending January 30,
2004, and for the First and Second Renewal Terms, an annual base
salary of $300,000.
(b) Annual Bonus. For each fiscal year of the Company during the term of
this Agreement, Employee shall be entitled, in the sole discretion of
the Board of Directors, to receive an annual bonus in an amount not to
exceed 75% of Employee's base salary, at the rate then in effect. The
Board of Directors shall also have the discretion to direct the
Company to grant Employee the right to purchase shares in the common
stock of the Company, the price and number of which shall be
determined by the Board of Directors in its sole discretion at the
time such direction is made.
(c) Additional Incentive Bonus. Employee shall be entitled to a cash
payment in the amount of $500,000 upon the achievement (evidenced by
duly executed documentation) by Employee of a Successful Restructuring
on or before September 30, 2001. For the purposes of this Agreement,
"Successful Restructuring" means: (i) the achievement by Employee of
discounts or reductions negotiated with the lenders and landlords of
the Company: and/or, (ii) the raising by Employee of equity capital in
the Company; provided such discounts,
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reductions and/or equity capital are sufficient, in the aggregate, to
enable the Company to meet all of its obligations and liabilities
throughout the twenty four (24) month period commencing from the date
of this Agreement. For greater certainty, the parties agree that the
Company shall have no obligations to make any payment under this
Section 6(c) if a Successful Restructuring is not achieved by Employee
on or before September 30, 2001.
(d) Vacation and Benefits. Employee shall receive six (6) weeks per year,
such vacation to be taken when and as desired by Employee. Any time
spent by Employee at professional meetings, instructional classes and
other similar meetings so as to better enable Employee to perform
professional services in the employ of the Company shall not be
considered vacation time. Employee shall participate in any and all
employment benefit and fringe plans of the Company to the extent under
the same terms and conditions applicable to employees of the Company
generally.
(e) Disability Payments. Company shall purchase and pay for a disability
insurance policy paying disability benefits, in a monetary amount not
less than 80% of his base pay at the rate then in effect, to the
Employee commencing on the date he becomes Disabled (as defined in
Subsection 5(b)) and continuing until the earliest of his attaining
age 65, his becoming able to return to gainful employment in any
occupation reasonably consistent with his education, training and
experience or his death. Such policy may exclude disablement resulting
from automobile racing or similar activities.
7. Assignment. This Agreement shall not be assignable by Employee; and shall
be assignable by the Company only to a person, firm, corporation or other
entity which may become a successor in interest (by purchase, merger or
otherwise) to the Company, with respect to the business or portion of the
business presently operated by it. The Company shall require any such
successor to assume an expressly agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no such succession had taken place.
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8. Entire Agreement. This writing represents the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
it may not be altered or amended except by agreement in writing.
9. Binding Effect/Severability. Subject to Section 7, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, executors and administrators. This
Agreement is personal in nature and neither of the parties hereto shall,
without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder, except as provided in Section 7. Without
limiting the foregoing, Employee's right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than transfer by his will or by the
laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this Section 9, the Company shall have
no liability to pay any amount so attempted to be assigned or transferred.
If any provision of this Agreement shall be or become illegal or
unenforceable in whole or in part for any reason whatsoever, the remaining
provisions shall nevertheless be deemed valid, binding and enforceable to
the fullest extent permitted by law.
10. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
11. Counterparts. This Amendment may be executed by the parties in two or more
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute one and same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMPLOYEE:
/s/Xxxx X. Xxxxxxxxx
Xxxx Xxxxxxxxx
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BALANCED CARE CORPORATION
By: /s/Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Board of Directors Member,
Compensation Committee
