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EXHIBIT 10.34
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") dated as of the 1st
day of May, 1996, by and between BALANCED CARE CORPORATION, a Delaware
corporation, with its principal executive offices at 0000 Xxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000, (the "Company"), and XXXXXXX X.
XXXXXXXX, an individual residing at 000 Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx
00000 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as its
Chief Financial Officer and the Executive wishes to be employed by the Company
in such capacity, subject to the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the mutual promises
hereinafter set forth and intending to be legally bound hereby, the Company and
the Executive hereby agree as follows:
1. POSITION AND DUTIES.
(a) The Company hereby agrees to, and hereby does, employ
the Executive, for the term and under the terms and conditions set forth
herein, to render services to the Company in the capacity of Chief Financial
Officer of the Company ("CFO") and in connection therewith to perform such
duties as have been previously rendered by the CFO and such other or additional
duties not inconsistent with the position of CFO as may be reasonably assigned
from time to time by the Board of Directors of the Company (the "Board"), the
Chief Executive Officer and/or the President of the Company.
(b) The Executive hereby accepts employment as the CFO of
the Company and agrees to render the services to the Company and perform the
duties described in Section 1(a) faithfully and to the best of his ability and
to devote his full business time and efforts thereto. Notwithstanding the
foregoing, with the consent of the CEO, the Executive may devote a reasonable
amount of time and effort to industry, community and charitable organizations.
2. TERM.
The term of employment hereunder (the "Term") shall commence
as of May 1, 1996 (the "Effective Date") and shall continue, subject to such
earlier termination of the Term and the Executive's employment hereunder as is
provided in Section 5 hereof, on April 30, 1998. The Term of this Agreement
shall automatically renew for one year on the first anniversary date and each
anniversary date thereafter (each, an "Extension Date") unless one party
provides written notice to the other in a manner described in Section 7(b)
hereof not later than sixty (60) days prior to the then next Extension Date of
its intention not to renew the Term. The date upon
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which the Term hereof, as extended from time to time, shall expire is
hereinafter referred to as the "Expiration Date."
3. AGREEMENT TO HOLD CERTAIN MATTERS CONFIDENTIAL.
During his employment with the Company and for any subsequent
period with respect to which he is entitled to receive a severance benefit
under this Agreement;
(a) Confidentiality. The Executive shall keep secret and
confidential all matters of the Company or relating to the Company, its
operations and businesses which are not, as of the time immediately preceding
such disclosure, in the public domain and generally known by the public and the
Executive shall not disclose them to any party except with the express written
consent of the Company or if the failure to disclose such would result in the
imposition on the Executive of a fine, sentence or penalty for contempt of
court or an administrative agency with jurisdiction.
(b) Equitable Relief. Executive acknowledges and agrees that
any breach of this Section 3 will cause the Company irreparable injury and the
Company shall have no adequate remedy at law with respect to any such breach.
Executive agrees that the Company shall be entitled, in addition to any
remedies it may have under this Employment Agreement or at law, to injunctive
and other equitable relief to prevent or curtail any breach of the provisions
of this Section 3.
4. COMPENSATION AND BENEFITS.
The Company shall pay the Executive the following salary and
grant to him the following other benefits:
(a) Base Salary. The Company shall pay the Executive for the
Term a base salary, in equal installments in accordance with the Company's
payroll practices then applicable to executive officers, at the annual rate of
One Hundred Thousand Dollars ($100,000.00) ("Base Salary"); provided, however,
that effective January 1, 1997, the Board shall review the rate of Base Salary
and may, in its sole discretion (after considering the performance of the
Executive, the financial performance of the Company, compensation paid to
comparable officers by other companies in the industry and such other factors
as the Board may deem relevant) increase such rate for the remaining portion of
the Term.
(b) Annual Bonus. The Executive shall be eligible to for an
annual bonus of up to 40% of his base salary subject to such terms and
conditions as may be determined by the CEO and approved by the Board of
Directors of the Company.
(c) Stock Options. The Executive will participate in the
Company's Stock Option Plan (the "Option Plant") when the same is established
and becomes effective in accordance with a Stock Option Agreement in the
standard form adopted by the Company. The Executive shall be granted a
non-qualified stock option under the Option Plan to purchase up to,
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to the extent then vested, 100,000 shares of the Company's common stock at a per
share exercise price of $1.50; such stock option shall become vested and
exercisable, subject to applicable securities laws, to the extent of 50,000
shares on the first anniversary of this Agreement if the Executive is then an
employee of the Company and to the extent of the full amount of the stock option
on the second anniversary of this Agreement if the Executive is then an employee
of the Company.
(d) Fringe Benefits. The Executive shall enjoy and benefit
under all fringe benefit plans, programs or arrangements sponsored by the
Company for employees generally or for executive officers in accordance with the
respective terms and conditions thereof.
(e) Reimbursement of Expenses. The Executive shall be entitled
to reimbursement of reasonable expenses incurred in connection with the
performance of his duties hereunder in accordance with the applicable policies
and procedures of the Company.
(f) Reimbursement of Temporary Living Expenses. The Executive
shall be entitled to $600 per month as reimbursement for temporary living
expenses for each month commencing January 1, 1997 and on the first business day
of each of the next twenty three (23) calendar months if on the first day of a
relevant month the Executive is then an employee of the Company.
(g) Reimbursement For Disability Insurance Premiums. The
Executive shall be entitled to reimbursement of disability insurance premiums he
pays to the American Institute of CPA's in the amount of $468 per year in 1996
and adjusted annually for inflation.
(i) Vacation. The Executive shall be entitled to a vacation of
four (4) weeks annually in accordance with the policies of the Company.
Notwithstanding the foregoing, the Company may, without breaching the terms of
this Agreement, (i) amend any employee benefit and/or fringe benefit plan in
which the Executive participates or any policy applicable to the Executive
relating to reimbursement of expenses, vacations or other terms and conditions
of employment generally applicable to all executive employees of the Company or
(ii) reduce the amount of base salary payable under this Agreement if, but only
if, such amendment or reduction is applicable to and proportionately affects
all executive employees of the Company.
5. TERMINATION OF EMPLOYMENT.
This Agreement, the Term hereof and the Executive's employment and right to
receive salary and other benefits (other than salary and other benefits accrued
through the termination date) in accordance with Section 4 (collectively, the
"Employment Rights") shall terminate on the earliest of the events described
below; provided, however, that upon a termination of Employment Rights, the
Stock Option Agreement shall remain in effect to the extent provided in such
agreement and shall remain enforceable in accordance with its terms. In the
event of any such
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termination, the Executive shall have the right to receive payments and other
benefits, if any ("Severance Rights"), as set forth below in this Section 5:
(a) On the Expiration Date. The Executive's Employment Rights
shall terminate on the then Expiration Date subject to the renewal and notice
provisions and the Executive shall not be entitled to receive any Severance
Rights after the expiration of the Term, as extended from time to time.
(b) Death or Disability. The Executive's Employment Rights
shall terminate upon his death or Disability (as defined in subsection (h)(III)
below) and the Executive shall have as Severance Rights the right to receive a
pro-rata portion of any bonus payment which may be accrued for the year in which
such death or Disability occurred. Nothing contained herein shall be deemed to
prevent the receipt by the Executive or his spouse or estate, as the case may
be, of any benefit payable to or with respect to such death or Disability under
any plan, program or arrangement then sponsored by the Company, if applicable.
(c) Voluntary Resignation by the Executive. The Executive's
Employment Rights shall terminate on the effective date of his voluntary
resignation and he shall not be entitled to receive any Severance Rights unless
such voluntary resignation is made after and as a consequence of a Change in
Control of the Company, as such term is defined below.
(d) Cause. The Company may terminate the Executive's
Employment Rights for Cause (as defined in subsection (h)(l) below) and the
Executive shall not be entitled to receive any Severance Rights.
(e) Breach of Agreement by Executive. If the Executive
materially breaches any provision of this Agreement or the ancillary agreements
attached as Exhibits hereto, the Company may terminate his Employment Rights
and the Executive shall not be entitled to receive any Severance Rights.
(f) Termination by the Company for Reasons Other Than Cause or
Upon a Breach of Agreement by the Company. If the Company breaches any provision
of this Agreement or the ancillary agreements attached as Exhibits hereto, the
Executive may terminate his Employment Rights and he shall be entitled to
receive as Severance Rights a lump sum cash payment equal to the Base Salary at
the rate then in effect for the period equal to one year.
(g) Termination Following a Change in Control. The Executive
shall be entitled to Severance Rights in the amount determined under subsection
(f) above if, within one year following a Change in Control, there occurs any of
the following events:
(I) any involuntary termination of the Executive except for
reasons relating to Cause or the Executive's material breach of this
Agreement;
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(II) any reduction in the Executive's title, responsibilities
(including reporting responsibilities) or authority, including as such
title, responsibilities or authority may be increased from time to
time;
(III) the assignment to the Executive of duties inconsistent
with the Executive's office on the date of a Change in Control or as
the same may be increased from time to time after a Change in Control;
(IV) any reassignment of the Executive to a location greater
than one hundred (100) miles from the principal executive offices of
the Company before the Change in Control;
(V) any reduction (including, after a Change in Control,
proportional reductions affecting all employees or executive
employees) in the Executive's annual base salary in effect on the date
of a Change in Control or as the same may be increased from time to
time after a Change in Control;
(VI) any failure (including, after a Change in Control,
proportional failures affecting all executive employees) to continue
the Executive's participation on substantially similar terms in any
incentive compensation or bonus plan in which the Executive
participated at the time of the Change in Control or any change or
amendment to any substantive provisions of any such plan which would
materially decrease the potential benefits to the Executive under any
of such plans;
(VII) any failure (including, after a Change in Control, a
proportional failure affecting all executive employees) to provide the
Executive with benefits at least as favorable as those enjoyed by the
Executive under any of the Company's pension, life insurance, medical,
health and accident or other employee plans in which the Executive
participated at the time of the Change in Control, unless such
reduction relates to a reduction in benefits applicable to all
employees generally; or
(VIII) any requirement that the Executive travel in
performance of his duties on behalf of the Company for a significantly
greater period of time during any year that was required of the
Executive during the year preceding the year in which the Change in
Control occurred.
(h) Definitions. As used in this Section 5, the following
terms shall have the meanings indicated:
(I) Cause, for purposes of, and for the duration of, this
Agreement, shall mean failure to materially perform stated duties where
such failure shall persist sixty (60) days after receipt by the
Executive of written notice of failure received from the Company;
Executive's conviction of any crime or offense involving money or other
property of the Company or which constitutes a felony; Executive's
performance of any act or his failure to act, for which if prosecuted
and convicted, a crime or offense involving money or
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property of the Company, or which would constitute a felony would have
occurred; any unauthorized disclosure by the Executive to any person,
firm or corporation other than the Company or its officers, directors
or employees, of any confidential information or trade secret of the
Company; any attempt by the Executive to secure any personal profit in
connection with the business of the Company; the engaging by the
Executive in any business other than the business of the Company which
unreasonably interferes with the performance of his duties hereunder;
or chronic alcoholism or drug addiction.
(II) Change in Control shall mean the occurrence of any the
following:
(A) There occurs a merger, consolidation or a sale, exchange,
transfer or other disposition of substantially all of the stock or
assets of the Company to another entity or other person unless (1)
such merger, consolidation reorganization, sale, exchange, transfer,
purchase or disposition is approved in advance by the Company's Board
of Directors and (2) stockholders who held at least a majority of the
voting power of the Company's outstanding securities immediately prior
to the consummation of any such transaction hold at least a majority
of the voting power of the outstanding securities of the legal entity
resulting from or existing after any such transaction and (3) a
majority of the members of the Board of Directors of the legal entity
resulting from or existing after any such transaction are former
members of the Board of Directors of the Company; or
(B) There occurs a contested proxy solicitation of the
Company's stockholders which results in the contesting party obtaining
the ability to elect fifty percent (50%) or more of the members of the
Board of Directors standing for election at any meeting of the
Company's stockholders.
(III) Disability shall mean the absence of the Executive from
the Executive's usual and customary duties with the Company on a
full-time basis for one hundred and twenty (120) consecutive days as a
result of incapacity due to mental or physical illness which a
physician selected by the Company determines in writing will prevent
the Executive from performing substantially all of his usual and
customary duties under this Agreement for a period of twelve (12)
consecutive months from the onset of such incapacity.
(i) Notice of Termination. Any notice of termination of
Employment Rights by either party hereto shall be in writing and delivered in
one of the methods set forth in Section 7(b) and shall set forth in reasonable
detail the reason for such termination and the effective date of such
termination which shall be no less than sixty (60) days following the date such
notice is delivered. No purported termination of Employment Rights shall be
effective unless preceded by a notice of termination as described in this
Section 5(i).
(j) Preservation of Rights. The Executive's right to receive
payments under this Agreement shall not decrease the amount of, or otherwise
adversely affect, any benefits payable to the Executive under any plan,
agreement or arrangement relating to employee benefits provided by the Company.
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6. SUCCESSORS.
(a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by
the Executive otherwise than by his will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.
7. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without reference
to its principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended, altered or modified except by a written agreement executed
by each of the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, at the
address first above written or to such other address as either party shall have
furnished to the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the addressee.
(c) If any provision of this Agreement shall be adjudged by
any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The failure of Executive or the Company to insist upon
strict compliance with any provision hereof or the failure to assert any right
the Executive or the Company may
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have hereunder shall not be deemed to be a waiver of such provision or right or
any other provision or right thereof by such party.
(f) This Agreement may be executed by the parties hereto in
two or more counterparts, each of which shall be deemed to be an original, but
all such counterparts shall constitute one and the same instrument.
(g) This Agreement and the ancillary agreements comprising
Exhibits A through C hereto contain the entire understanding of the Company and
the Executive with respect to the subject matter hereof and thereof.
(h) The headings of the sections and subsections of this
Agreement are for convenience only and shall not control or affect the meaning
or construction or limit the scope or intent of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
ATTEST: BALANCE CARE CORPORATION
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxxx
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Secretary Title: CEO
WITNESS: EXECUTIVE:
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx
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