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(10) (ii) Employment Agreement between All American Medical and Surgical
Supply Corp. and Xxxxxxx Xxxxxxxx dated October 26, 1995.
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EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 26th day of October, 1995 by
and between ALL AMERICAN MEDICAL & SURGICAL SUPPLY CORP. a New York corporation
with its offices at 0000 00xx Xxxxxx, Xxxxxxxx, Xxx Xxxx (the "Employer") which
term includes any subsidiaries to be formed) and XXXXXXX XXXXXXXX, residing at
0000 00xx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx (the "Employee").
W I T N E S S E T H
WHEREAS, Employer was recently incorporated in New York by its parent,
Medicore, Inc. ("Medicore") to engage in the home health care business, and the
providing and marketing of home health care products and services (collectively
"Services"), initially but not limited to the sales and rental or durable
medical equipment and supplies, such as hospital beds, wheelchairs, walkers,
canes, electronic monitoring equipment, surgical supplies, ostomy and
incontinence products, and other miscellaneous products and services
(collectively "Durable Medical Equipment"); and
WHEREAS, Employee has the experience in purchasing and marketing the
Services and Durable Medical Equipment and has the licenses to operate a home
health care business which licenses are being transferred to the Employer, and
Employee has the administrative skills and expertise to operate such home
health care business; and
WHEREAS, the parties wish to enter into this Agreement whereby
Employer shall employ Employee as its President and Employee so desires to be
employed under the terms and conditions herein contained.
NOW, THEREFORE, for good and valuable consideration receipt of which
is hereby acknowledged and in consideration of the convenants and promises
contained herein, the parties, intending to be legally bound hereby, each
mutually agree as follows:
1. EMPLOYMENT. Employer, in consideration of the transfers of
the licenses as provided in Section 3 hereof, and based upon the
representations of Employee as per Section 2 hereof, hereby employs Employee as
its President, his duties to be such as are customarily performed by persons
employed in such capacity; provided, in particular, since Employer was recently
organized, Employee shall be specifically responsible for all sales and
marketing of Services, initially the Durable Medical Equipment ("Marketing"),
and Employee shall further be responsible for all administrative aspects of
Employer's operations relating to the Services, including, but not limited to
purchasing, leasing, operations, hiring, bookkeeping, internal controls,
accounting, and other related administrative responsibilities (collectively
"Administration"). Employee shall perform his duties under the direction of
the Chief Executive Officer of Employer and in conformity with the standards
and policies established by the Board of Directors of Employer; and Employee
shall not engage in any other business, directly or indirectly, whether
competitive or not with the Services of the Employer; and Employee agrees to
devote substantially his entire time, attention and efforts to the business of
Employer. Employee shall perform such services as may from time to time
reasonably be required of him and Employee shall accept such
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offices, positions, directorships and/or other responsibilities as Employer may
determine, without being entitled to receive additional remuneration, except as
otherwise provided herein.
2. REPRESENTATIONS OF EMPLOYEE. Employee hereby represents and
warrants that (i) he has five years experience and know-how in the home health
care business both in Marketing and Administration; (ii) he has the expertise
to establish and develop the operations and business of the Employer; (iii) he
is not a party to or the subject of any order or directive of any court or
governmental agency, nor subject to any agreement or other arrangement that
would restrict or limit him in any manner from acting and performing under the
terms of this Agreement; (iv) he has the authority, right and power to enter
into and perform under the terms of this Agreement; (v) he, and/or any of his
affiliates or associates, are the true and lawful owners and/or have full and
complete right, title and interest in and to any and all licenses, permits and
similar rights (collectively "Licenses") necessary to operate the home health
care business as intended to be operated by and within the Employer and to
collect reimbursement, fees and remuneration and other consideration for
Marketing such Services from private and governmental payors, including but not
limited to Medicare, Medicaid and private insurance and other payors without
any restrictions, prohibitions, contingencies, conditions or limitations of any
kind.
3. TRANSFER OF LICENSES. As consideration for Medicore
establishing Employer and funding Employer's operations, which funding is to be
$100,000, in which material and substantial part was based upon the
representations of Employee as per Section 2 of this Agreement, and a
substantial part for the transfer of the Licenses, Employee hereby agrees to
and shall use its best efforts to immediately transfer all the Licenses
necessary for Employer to operate and engage in the home health business and be
reimbursed by and from third-party payors, including but not limited to
Medicare, Medicaid and private insurance companies, all of which must be
transferred into the name of Employer not later than November 30, 1995; and
Employer will assist Employee and file all necessary papers and documents and
pay appropriate fees to accomplish the transfer of the Licenses to Employer
forthwith.
4. TERM. The term of employment under the provisions of this
Agreement shall be for a period of five (5) years and two (2) months effective
November 1, 1995 ("Commencement Date") and ending December 31, 2000 (the
"Term"), unless terminated sooner pursuant to the express provisions hereof;
provided, in the absence of Employer obtaining full, unencumbered title to the
Licenses in its name as per Section 3, then this Agreement will be immediately
terminated, and null and void, without any obligation of either party to the
other.
5. REMUNERATION.
(a) During the Term Employer will compensate Employee for his
services based upon the greater of (i) eight (8%) percent of the pre-tax
profits (as defined below) of the Employer for each calendar year ending
December 31, during which this Agreement is in effect, less any compensation
paid to Employee pursuant to subparagraph (ii) of this Section 5(a), up to a
maximum per year compensation of $200,000, or (ii) ten (10%) percent commission
of Employee's Marketing (which term excludes sales and Marketing of any other
person, whether an employee, agent, officer, director, independent contractor
of Employer or otherwise). "Pre-tax profits" as used herein shall mean the
pre-tax income of Employer prior to deduction for income tax provision as
determined by Employer's independent auditor. The pre-tax profit computation
shall be made in accordance with generally accepted accounting practices
applied on a consistent basis. The pre-tax
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profits as so determined by the accountants shall be conclusive upon Employer
and Employee. Employee shall have the right to examine the Employee's books,
records and tax returns.
During the Term Employer shall provide Employee with a payment of
$1,000 per week, ("Weekly Draw") against the commissions to be earned based
upon a minimum of Employee generated Marketing of $520,000 per annum (measured
on a calendar year basis) ("Minimum Term Commission"). Commissions due
Employee shall be paid quarterly within 45 days from the close of the
immediately preceding quarter for which commissions are due. Each quarter
shall be measured on a calendar quarter basis, provided the first Quarter of
1996 shall include November and December, 1995 (the "1995 Period"). Employer
has the right in its sole discretion to adjust any such Employee commissions
downward in direct proportion to such quarterly Marketing generated by Employee
as such relates to the Minimum Term Commissions which are $130,000 per
quarter(1). Such adjustment shall be effected on a quarterly basis for the
immediately succeeding quarter, and, if necessary, continued to any subsequent
quarter(s) thereafter; and such adjustments shall be on a dollar for dollar
basis based upon the difference between Minimum Term Commissions as represented
by the Weekly Draw which Employee has already received for that quarter and the
Employee generated Marketing for that quarter. All adjustments shall be
effected on a pro-rata basis in equal weekly amount reductions against the
Employee's future Weekly Draw. Upward adjustments based on Employee generated
Commissions in excess of the Minimum Term Commissions for a particular quarter
shall likewise be paid by Employer to Employee on a pro-rata basis over the
term of the next immediately succeeding quarter.
(b) It is understood however, that for a period during the Term,
which shall be the earlier of one year from January 1, 1996, or up to and upon
the hiring of an individual responsible for Administration ("Initiation
Period"), the minimum per annum commission will be based on $400,000(2) per
annum or thirteen (13%) percent during the Initiation Period ("Minimum
Initiation Commission"); provided, however, that once the Minimum Initiation
Commission has been earned by the Employee, to wit, the $52,000 in commissions
during the Initiation Period, then notwithstanding that it is still the
Initiation Period any and all commissions over and above the Minimum Initiation
Commission shall be at the rate of 10% as otherwise provided in subparagraph
(a) above. All adjustments and payments shall be as provided for in
subparagraph (a) of this Section 5.
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(1) For the fisrt Quarter, 1996 the Minimum Term Commission shall be
$173,334 due to inclusion of the 1995 Period, which results in the
1996 per Annum minimum Employee generated Marketing requirement of
$563,334.
(2) For the first Quarter, 1996 the Minimum Initiation Commission shall be
$133,334 due to the inclusion of the 1995 Period, which results in the
1996 per Annum minimum Employee generated Marketing requirement of
$433,334.
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EXAMPLE OF COMPENSATION:
Assumes 13 weeks per quarter; and assumes that the Initiation Period
was 12 months (rather than having personnel hired during that period thereby
otherwise earlier terminating the Initiation Period). Employee will have
received from Employer at the end of each quarter $13,000 in Weekly Draw.
Employee Generated Marketing Commission(3) Weekly Draw
Quarter 1* $120,000 $15,600 $1,000
-
Quarter 2 75,000 9,750 1,200(4)
-
Quarter 3 100,000 13,000 750(5)
-
Quarter 4 150,000 14,900(6) 1,000
-------- ------- -
$445,000 $53,250
______________
* First Quarter of 1996 includes the 1995 Period.
(3) 13% commission until Minimum Initiation Commission of $52,000 earned
- during Initiation Period and thereafter, whether during the Initiation
Period or thereafter during the Term, the commission will be 10% of
Marketing generated by Employee. See Note (1) above.
(4) Subject to Notes (1) and (2) above, during Quarter 1 Employee received
- $13,000 Weekly Draw; the Minimum Initiation Commission for the quarter
being $13,000 (based on Employee generated Marketing of $100,000 per
quarter during the Initiation Period). Therefore, the excess of
$2,600 is to be paid pro-rata during Quarter 2 with the Weekly Draw
for Quarter 2 of $1,200. If this was not the Initiation Period, then
the minimum Marketing generated per quarter would be $130,000 with a
Minimum Term Commission of $13,000 per quarter (subject to Note (1)
above) and, therefore, the Company would have had the right to adjust
the Weekly Draw for the next Quarter downward by an aggregate of
$1,000 (10% of $10,000 shortfall) or $76.92 per week, for a pro-rata
quarterly reduced Weekly Draw of $923.08.
(5) Quarter 2 Employee generated Marketing is $25,000 short of the minimum
- Marketing, Employee having already received $13,000 in Weekly Draw
against commission, plus pro-rata additional commission from Quarter
1, and thereby was paid in excess of the Minimum Initiation Commission
by $3,250, which amount to be adjusted for the next immediately
succeeding quarter (Quarter 3), as indicated in subparagraph (a) of
this Section 5, by a pro-rata reduction of such sum from the Weekly
Draw during Quarter 3 of $250 per week for a Weekly Draw of $750 for
Quarter 3.
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Quarter 3 reflects minimum Employee generated Marketing satisfied;
therefore the $13,000 commission earned had already been received by
Employee in Weekly Draw which can be reduced, as indicated in Quarter
2 computations, by Employer's adjustment reducing $3,250 of
commissions overpaid in Quarter 2.
(6) Quarter 4 reflects Employee generated Marketing of $150,000.
- Commission is based upon 13% of the balance of the Minimum Marketing
Sales for the Initiation Period which is $105,000 ($295,000 of the
$400,000 minimum Marketing already having been met) with the balance
of $45,000 of Employee generated Marketing to be paid at 10%
commission yielding a commission of $18,150 for Quarter 4. The excess
of $5,150 over the Weekly Draw to be paid pro-rata in next quarter's
Weekly Draw by an additional $396.15 per week or $1,396.15 for Quarter
5 Weekly Draw.
(c) Compensation to Employee shall be payable in bi-weekly
installments in accordance with the Employer's normal payroll practices
including all appropriate and normal deductions for social security and
withholding taxes.
6. EXPENSES AND PERQUISITES.
(a) Employee will be entitled to reimbursement, upon presentation of
vouchers and/or receipts, for reasonable business expenses incurred by Employee
with respect to the performance of his duties in furtherance of Employer's
business as otherwise provided in this Agreement.
(b) Employee is further entitled to receive on an equal and
comparable basis, all other perquisites currently provided or to be provided in
the future to Employer's executive officers. Such perquisites include
executive health and medical insurance plans.
7. VACATION. Employee shall be entitled each year to three (3)
weeks vacation which cannot be carried over to any other period nor shall
Employee be compensated for vacation not taken. Employee may take a vacation
at his discretion, provided such time is compatible with the vacation, meeting
and work schedules of employees of Employer relevant to the responsibilities
and duties of Employee. Employee will not take three (3) consecutive weeks of
vacation without the approval of the Board of Directors. Employee shall
arrange for the continued operation of the business of the Employer and the
performances of Employee's duties and responsibilities by a qualified
replacement, if necessary, acceptable to Employer, during such times as
Employee is absent.
8. TERMINATION. The Term shall terminate prior to December 31,
2000 upon the happening of any of the following events:
(a) Automatically and without notice from Employer upon the death of
Employee.
(b) Upon written notice from Employer to Employee in the event that
Employee becomes physically or mentally disabled, either totally or partially.
(c) Upon written notice by Employer on grounds of Employee conviction
of a crime, failure to carry out the policies of Employer, persistent
absenteeism, felonious act or other dishonest practice, non-performance of his
responsibilities and obligations to Employer, breach of the provisions of this
Agreement, gross misconduct or neglect, whether by commission or omission,
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conduct prejudicing or tending to bring himself or the Employer into contempt
or disrepute, or any similar cause.
Upon such termination of employment, Employer shall not be required to
pay Employee any severance pay, or any other sum except Employee compensation
earned, if any, in accordance with Section 5 of this Agreement, to the date of
such termination.
9. NON-COMPETITION.
(a) Employee shall not at any time within a period of one year from
the date of termination of his employment hereunder ("Non-Compete Period") if
such termination is (i) by expiration of time, (ii) voluntary, or (iii) for
cause, which term includes but is not limited to those occurrences as set forth
in Section 8 (c) hereof:
(i) directly or indirectly, whether as principal, servant,
employee, agent or consultant, canvass, solicit or entice or endeavor to entice
away from Employer any director, officer or employee of Employer, or
(ii) directly or indirectly, whether as principal, servant,
employee or agent or in any other capacity whatsoever carry on or be engaged or
interested in any business within the states of New York and New Jersey
carrying on or engaged in, directly or indirectly, the Services in competition
with Employer, competition to mean those Services then provided and marketed to
and with customers as that term is used and defined herein, or
(iii) directly or indirectly, whether as principal, servant,
employee or agent, solicit or seek to obtain for himself or for any person,
firm or corporation by whom he is employed or with whom he is associated, the
business of, or act as principal, servant, employee or agent for, or directly
or indirectly accept any benefit, whether in money or otherwise from any
business in connection with the trade or business conducted for any person,
firm or corporation, who either at the date of termination of his employment or
at any time during the 12 months immediately preceding such termination, is or
was a customer of Employer, provided that such restriction applies only with
respect to Services provided and marketed within such 12 month period by the
Employer for that customer; and provided further
(A) for the purpose of this clause the expression "customer"
shall be deemed to include a prospective customer whose business was
the subject of negotiation with Employer at any time within a period
of 12 months prior to the termination of Employee, and
(B) in the event Employee, directly or indirectly, receives any
benefit, whether in money or otherwise as aforesaid, at or in respect
of any time during said Non-Compete Period he shall, without prejudice
to any other rights or remedies available to Employer, be bound
forthwith to account for and make payment to Employer in respect of
such benefit.
(b) Each of the foregoing obligations shall be deemed to be separate
and severable obligations and each of said obligations shall be construed
accordingly.
(c) While the foregoing restrictions are considered by the parties to
be reasonable in all the circumstances, it is agreed that if any of such
restrictions shall be held to be void or ineffective for whatever reason but
would be held to be valid and effective if part of the wording thereof were
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deleted or the periods thereof reduced or the area thereof reduced in scope,
the said restrictions shall apply with such modifications as may be necessary
to make them valid and effective.
10. CONFIDENTIALITY.
(a) Employee shall not during the Term, except in the proper course
of his duties, and shall not at any time and in any circumstances for a period
of three years after the termination hereof, divulge to any person whomsoever
and shall use his best efforts to prevent the publication or disclosure of any
secrets, trade secretes, confidential knowledge or information or any
information concerning the business, finances or affairs of Employer or of any
of its customers or clients (including without prejudice to the foregoing
generality the names and locations of customers, names of persons to contact
within customer organizations, specifications of customer needs, specification
of Services meeting customer needs, cost and pricing policies, sources of
supply of Services and other proprietary information) or any of their dealings
or transactions which may have come or may come to his knowledge during or in
the course of his employment.
(b) Employee shall immediately upon termination of his employment for
whatever reason deliver up to Employer all price lists, list of customers,
correspondence and other documents, papers and property belonging to Employer
which may have been prepared by him or may have come into his possession in the
course of his employment and shall not retain any copies thereof.
11. REMEDIES. Employee acknowledges that the remedy at law for
any breach of any of the provisions of this Agreement, particularly but not
limited to Sections 9 and 10, shall be inadequate; that any such breach will
cause irreparable injury to the Employer and/or its shareholders; that the
Employer, in addition to any other rights and remedies existing at law or
equity, or by statute, or under the terms of this Agreement, shall be entitled
to an injunction or restraining order or other equitable relief without the
need of posting any bonds with the court where such equitable relief is sought,
restraining Employee from doing or continuing to do any such acts or any other
violations or threatened violations or omitting to do such acts as are
otherwise required in and under this Agreement, particularly but not limited to
Sections 9 and 10. Employer shall be entitled to reasonable attorney's fees
and other costs it may incur in connection with protecting its rights in the
event of a breach of this Agreement, particularly but not limited to Sections 9
and 10.
12. RESALE OF EMPLOYEE OWNERSHIP. If Employee voluntarily leaves
or terminates his relationship with Employer prior to the expiration of the
Term, for any reason whatsoever, or prior to the expiration of the Term
Employee dies or becomes disabled to the extent that he is unable to perform
under this Agreement, or Employee has any bankruptcy, receivership, assignment
for the benefit of creditors, or similar proceeding initiated against or
involving Employee, whether voluntarily or involuntarily, which proceeding is
not dismissed within thirty (30) days of its initiation (collectively for
purposes of this Section 12 "Termination"), then Employee's 15% ownership in
Employer ("Employee's Shares") which Employee has obtained upon establishment
of Employer and in consideration for this Employment Agreement, shall be sold
by Employee, or Employee's legal representative as the case may be, to Employer
and Employer shall purchase Employee's Shares for One ($1.00) Dollar.
Employee, and if Employee's executor or administrator or other legal
representative is involved such person, shall execute and deliver all necessary
documents Employer may require to establish its absolute title to the
Employee's Shares to be sold to Employer as provided herein.
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Employee agrees that he shall not transfer, gift, pledge, sell,
hypothecate, loan, grant any option upon or for said Employee's Shares, nor
shall such Employee's Shares be placed or held in any other name alone or
jointly with or without Employee, which Employee's Shares shall be held solely
in the name of Employee, which shall not pass by descent or distribution or
will, and which Employee's Shares will in no way or manner, directly or
indirectly, be disposed of or transferred (collectively "Transferred"). Any
such act or omission of or by Employee attempting or otherwise causing the
Employee's Shares to be so Transferred shall be deemed a breach of this
Agreement and a Termination of Employee providing for the immediate and
automatic sale of Employee's Shares to Employer.
Any sale of Employee's Shares shall be promptly accomplished after the
event giving rise to such sale, but in no event more than seven (7) days
therefrom.
Employee's Shares are not liquid and there is no open market for such
Employee's Shares, and for that reason, among others, Employer will be
irreparably damaged if this sale provision is not specifically enforced. Any
injunction to so enforce this provision shall, however, be cumulative and not
exclusive, and shall be in addition to any other remedy which Employer may
have.
The certificate or certificates representing the Employee's Shares
shall be endorsed with the following legend:
"This share certificate is held subject to the terms of an Employment
Agreement dated October 26, 1995 made between All American Medical &
Surgical Supply Corp. and Xxxxxxx Xxxxxxxx, a copy of which is on
file with the Secretary of the Company."
Employee, to induce Employer to enter into this Agreement, hereby
waives to the extent permitted by law, all rights that he may have by operation
of law or otherwise to Transfer the Employee's Shares.
13. BINDING ON SUCCESSORS. The rights and obligations of the
parties hereto shall inure to the benefit and shall be binding upon their
successors and assigns.
14. WAIVER OF BREACH. The waiver by Employer or Employee of a
breach by either party of any provision hereof shall not operate or be
construed to operate as a waiver by either party of any subsequent breach of
any other provision hereof.
15. SURVIVAL OF PROVISIONS. The provisions of Sections 2, 3, 9
and 10 shall survive termination of employment of this Agreement. If any
provision of this Agreement is declared invalid by any court of other competent
authority the remaining provisions of this Agreement shall not be affected
thereby.
16. ENTIRE AGREEMENT. This instrument contains the entire
agreement of the parties and may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
17. ASSIGNABILITY. This Agreement and its rights and obligations
may not be assigned by Employee. Employer may assign any of its rights and
obligations hereunder to a successor or surviving corporation resulting from a
merger, consolidation, sale of assets or stock, or other corporate
reorganization.
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18. NOTICES. Any notice permitted or required to be given by this
Agreement shall be effected, if in writing, and delivered personally or by
registered or certified mail, postage pre-paid, return receipt requested, or by
overnight mail, Federal Express or similar delivery to each of the parties at:
Employer: All American Medical & Surgical Supply Corp.
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Copy to: Xxxxxxxx X. Xxxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000
Employee: Xxxxxxx Xxxxxxxx
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Copy to: Xxxxx X. Xxxxxxx, Esq.
00 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
with such other addresses as any party may specify by written notice to the
other party similarly given.
19. DISPUTE. In the event of a dispute concerning either the
interpretation or the enforcement of any provision of this Agreement and such
dispute is resolved by a court having jurisdiction thereof, then in such event,
the prevailing party shall be entitled to receive reimbursement of reasonably
attorney's fees and court costs from the non- prevailing party.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed
in its corporate name by an appropriate officer and its corporate seal to be
hereto affixed, and Employee has affixed his signature, all on the date and
year first above written.
ATTEST: ALL AMERICAN MEDICAL & SURGICAL
SUPPLY CORP.
/s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- -----------------------
Xxxxxxxx X. Xxxxx, Secretary XXXXXX X. XXXXXXXX,
Chairman of the Board
WITNESS: EMPLOYEE
/s/ Xxxxxxx Xxxxxxxx
----------------------- --------------------
XXXXXXX XXXXXXXX
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