EMPLOYMENT AGREEMENT
This is an agreement dated as of November 1, 1996 setting forth the terms
on which Continental Health Affiliates, Inc. (the "Company"), a Delaware
corporation, will employ Xxxx Xxxxx (the "Employee") during the Employment
Period described below, which terms are as follows:
1. EMPLOYMENT OF EMPLOYEE. The Company will employ the Employee during
the Employment Period described in Paragraph 2 to serve as the Chief Executive
Office of the Company and of any of its subsidiaries (including Infu-Tech,
Inc.) which are specified by the Board of Directors of the Company. Except as
provided in Paragraph 13, the Employee will devote the substantial portion of
his working time during the Employment Period to his duties in that capacity or
those capacities. The Employee also will, if elected to do so, serve on the
Board of Directors of the Company and on the Boards of Directors of some or all
of its subsidiaries.
2. EMPLOYMENT PERIOD. The period during which the Employee will be
employed under this Agreement (the "Employment Period") will, except as
provided in Paragraph 8, be the period which begins on November 1, 1996 and
ends on and includes July 31, 2000.
3. SALARY. During the Employment Period, the Employee will receive a
salary at the rate of $400,000 per full year (including any sums paid by
subsidiaries of the Company). This salary will be paid in equal installments at
least as frequently as the Company pays salary installments at least as
frequently as the Company pays
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salary installments to its senior executives generally, and in any event not
less frequently than once each month. Nothing herein shall be construed to
prevent the Board of Directors from reconsidering the rate of salary (but not
less than the current salary) in light of future circumstances.
4. BONUSES.
(a) Promptly after the Company completes its consolidated
financial statements for each fiscal year which ends during the Employment
Period, the Company will pay the Employee a bonus equal to 2% of the
consolidated net income before provision for income taxes of the Company and
its subsidiaries during that fiscal year as shown on its consolidated financial
statements.
(b) On or before each June 30 during the Employment Period,
the Company will pay the Employee a bonus equal to (i) 2% of the amount, if
any, by which the market value of the Company's Common Stock on the last
trading day in the immediately preceding May is greater than the higher of (A)
300% of the market value of the Company's Common Stock on May 31, 1995 or (B)
the highest market value of the Company's Common Stock on any prior last
trading day in May during the Employment Period, minus (ii) any bonus the
Employee receives from a subsidiary of the Company based upon the market price
of that subsidiary's stock on a date within 12 months prior to the date the
bonus is paid under this Paragraph. For the purposes of this Agreement, the
"market value of the Company's Common Stock" on any day will be (x) the average
of the last reported sale price of the Common Stock in the principal
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market on which the Common Stock is traded on each of the preceding 20 days on
which there is trading in that market, or if actual sale prices are not
reported for transactions in that market, the mean of the high bid and low
asked prices of the Common Stock on each of those 20 days, times (y) the number
of shares of Common Stock which are outstanding on May 31, 1995.
5. ADDITIONAL BENEFITS. The Employee will be entitled to participate
in all insurance, health, retirement and other benefit plans which are
available generally to senior executives of the Company. The Board of Directors
of the Company may, in addition, award stock options or other incentives to the
Employee under incentive plans adopted by the Company for its senior executives
or key employees.
6. VACATIONS. The Employee will be entitled to vacations in accordance
with the Company's vacation policy in effect from time to time with respect to
senior executive officers generally.
7. AUTOMOBILE. The Company will provide the Employee with the use of
an automobile, commensurate with the Employee's position with the Company, in
connection with the Employee's activities on behalf of the Company.
8. TERMINATION OF AGREEMENT. The Company will have the option to
terminate the term of this Agreement, and the Employment Period, by giving a
Notice of Termination to the Employee after any of the following occurs:
(1) The Employee fails in any material respect to
perform his duties under this Agreement, or to fulfill in a
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material respect any other of his obligations under this Agreement,
and that failure continues for more than 60 days after notice from the
Company or its Board of Directors.
(2) The Employee dies.
(3) The Employee is unable to perform his duties under this
Agreement because of physical or mental disability for a period of
more than 120 consecutive days or for a period of more than 200 days
during a period of 12 months.
(4) The Employee is convicted of a felony related to the
Employee's activities as an employee of the Company, related to the
Employee's relationship with the Company or otherwise involving the
Company.
If the Company delivers Notice of Termination to the Employee, the term of this
Agreement, and the Employment Period, will terminate on a date specified in the
Notice of Termination, which may be the day the Notice of Termination is given.
After the date on which the term of this Agreement is terminated under this
Paragraph, neither the Company nor the Employee will have any further rights or
obligations under this Agreement, except that (i) the Company will be required
to pay, to the extent it has not already done so, the Employee's salary and
bonuses specified in Paragraphs 3 and 4 through the date this Agreement
terminates, and (ii) the Employee will continue to be bound by the provisions
of Paragraphs 9, 10 and 11.
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9. AGREEMENT NOT TO COMPETE. The Employee will not at any time prior
to July 31, 2000 (even if the term of this Agreement terminates before that
date) engage on behalf of anyone other than the Company and its subsidiaries,
whether as an employee, a shareholder, a partner, a consultant or otherwise, in
any business which provides or offers services substantially similar to those
which the Company or any of its subsidiaries is at the time providing or
offering, or actively preparing to provide or offer, in any state in which the
Company is, or is actively preparing to become, engaged in that business,
except that (i) nothing in this Paragraph will prevent the Employee from
engaging after the term of this Agreement terminates in any business in which
the Company is not engaged, or actively preparing to engage, on the date the
term of this Agreement terminates, and (ii) nothing in this Paragraph will
prevent the Employee from owning less than 1% of the outstanding stock of any
publicly traded corporation, which competes with, or whose business(es)
primarily compete with, or provide or offer services substantially similar to
those provided or offered by the Company.
10. CONFIDENTIAL INFORMATION. The Employee agrees to keep
confidential, during the term of this Agreement and for at least two years
after the term of this Agreement terminates, all information about the Company
or its subsidiaries which the Company or any of its subsidiaries treat as
confidential, including, but not limited to, information about customers,
marketing plans,
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marketing techniques and possible new products or services, except that the
Employee will not be required to keep particular items of information
confidential after those items of information become generally available to the
public without a breach by the Employee of the Employee's obligations under
this Paragraph.
11. RIGHT TO INJUNCTIVE RELIEF. The Employee acknowledges that the
Company will suffer irreparable harm, which cannot readily be measured in
monetary terms, if the Employee breaches his obligations under Paragraph 9 or
Paragraph 10. Therefore, the Employee agrees that the Company will be entitled
to obtain injunctive relief against any breach or threatened breach by the
Employee of his obligations under either of those Paragraphs. That injunctive
relief will be in addition to any other relief to which the Company or any of
its subsidiaries may be entitled.
12. CHANGE OF FUNCTION. Because the Employee's bonus under Paragraph 4
is dependent on the performance of the Company and its subsidiaries and the
Employee's ability to influence that performance would be substantially
affected by the Employee's ceasing to function as the Chief Executive Officer
of the Company, if at any time during the term of this Agreement the Employee
ceases due to action (including a request for the Employee's resignation) by
the Board of Directors of the Company or by a holder of a majority of the
outstanding Common Stock of the Corporation (other than a person to whom the
Employee sold stock of the Company) to hold the title and to perform the
functions of the
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Chief Executive Officer of the Company, the Employee will have the right (a) to
elect to receive, in lieu of any damages or other relief to which the Employee
might be entitled, immediate payment of (i) the entire salary to which the
Employee would become entitled under Paragraph 3 if the Employee continued to
be employed under this Agreement through July 31, 2000, plus (ii) the bonuses
the Employee would receive under Paragraph 4(a) if the consolidated net income
before provision for income taxes of the Company and its subsidiaries during
each remaining calendar year which ends prior to July 31, 2000 (including the
calendar year during which the Employee ceases to be the Chief Executive
Officer of the Company) exceeded the consolidated net income before provision
for income taxes of those companies during the next preceding calendar year by
the greater of (x) 50% or (y) $500,000, plus (iii) the bonuses the Employee
would receive under Paragraph 4(b) if the market price of the Common Stock on
each remaining last trading day in May which occurs prior to July 31, 2000 were
100% higher than it was on the next preceding last trading day in May, and (b)
to terminate his employment with the Company without adversely affecting his
right to the payment described in clause (a).
13. PERMITTED OTHER ACTIVITIES. Nothing in Xxxxxxxxx 0, Xxxxxxxxx 9 or
elsewhere in this Agreement will prevent the Employee from (a) making and
overseeing investments in real estate and other personal investments in
companies not engaged in the healthcare business or in any other business in
which neither the
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Company nor any of its subsidiaries is engaged, or actively preparing to
engage, at the date the Employee makes the investment, (b) continuing to own
and oversee interests in nursing homes which the Employee owns at the date of
this Agreement, (c) continuing to be an employee and shareholder of Infu-Tech,
Inc. even if it ceases to be a subsidiary of the Company, or (d) acting as a
member of governmental commissions or governmentally created advisory groups,
or otherwise rendering advice to governmental officials on healthcare or other
matters.
14. MISCELLANEOUS.
(a) Any notices or other communications to the Employee or to
the Company under or regarding this Agreement must be in writing and will be
deemed given when delivered in person or sent by facsimile transmission to the
Company or the Employee, as the case may be, at the Company's principal
offices, or on the third day after the day on which mailed to the Company or
the Employee, as the case may be, by first class mail addressed to the Company
or the Employee at the Company's principal offices, except that after the term
of this Agreement terminates, any notice or other communication to the Employee
will be deemed given when delivered in person or sent by facsimile
transmission, or on the third day after the day on which mailed by first class
mail, to the Employee at an address specified by the Employee to the Company in
the manner provided in this Paragraph (or, if the Employee does not specify an
address, at the Company's principal offices).
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(b) This Agreement is for the benefit of the Employee and the
Employee's heirs and legatees, and of the Company, its subsidiaries and their
respective successor and permitted assigns. Neither the Company nor the
Employee may assign any of its or his rights or obligations under this
Agreement without the written consent of the other of them, except that if the
Company's business is transferred substantially as an entirety to any other
firm (whether through a stock sales, an asset sale, a merger or in any other
manner), this Agreement, and the rights and obligations or the Company under
it, may be transferred to that other firm if, but only if (i) that other firm
delivers to the Employee a document in which the other firm agrees to be bound
by this Agreement in the same manner, and to the same extent, as the Company
and (ii) the Employee and the other firm agrees to replace the bonus described
in Paragraph 4(b) with a bonus which is a reasonable substitute for that bonus.
(c) This Agreement will be governed by, and construed under,
the laws of the State of New Jersey governing contracts made and to be
performed in that State.
(d) This document contains the entire agreement between the
Company and the Employee regarding the employment of the Employee by the
Company during the Employment Period.
(e) This Agreement may not be amended other than by a written
document signed by both the Company and the Employee.
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(f) This Agreement may be executed in more than one copy,
each of which will be an original, but all of which together will constitute
one and the same agreement.
To evidence their agreement, the Company and the Employee are
executing this Agreement on the date specified on the first page with the
intention of being legally bound by its provisions.
CONTINENTAL HEALTH AFFILIATES, INC.
By: ______________________________
__________________________________
XXXX XXXXX
EMPLAGMT\CHAJR96
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