EMPLOYMENT AGREEMENT
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This Agreement made and entered into this 10th day of November, 1999, by and
between New York Health Care, Inc., a New York corporation, with its principal
place of business at 0000 XxXxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (hereinafter
"Employer" or the "Company"), and Xxxxx Xxxxx, an individual whose residential
address is at 000 Xxxx 00xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (hereinafter
"Employee" or "Executive").
WITNESSETH:
WHEREAS, Employer is engaged in the business of home health care;
WHEREAS, Employee possesses skills, knowledge, abilities and experience which
Employer wishes to continue to avail itself of; and
WHEREAS, Employer wishes to continue the employment of Employee;
NOW, THEREFORE, in consideration of the mutual covenants as set forth herein;
THE PARTIES HERETO AGREE AS FOLLOWS:
1. EMPLOYMENT. Employer hereby shall employ Employee as the President and
Chief Executive Officer of the Company and to perform such additional
duties and services as may be assigned to him pursuant to Paragraph 3
hereof. Employee hereby accepts such employment, upon the terms and
conditions hereinafter set forth.
2. TERM. The term of employment of Employee shall be for five years commencing
as of December 27, 1999, and ending at the close of business December 26,
2004.
3. DUTIES.
(A) Employee's duties shall include assisting the overseeing and directing
of the Company, locating and developing new projects and other
business opportunities for it and generally promoting and facilitating
the Company's business objectives. For purposes of this paragraph,
Employer's subsidiaries, if any, are also encompassed in the term
"Company".
(B) During the term of this Agreement, Employee shall perform such
additional services as shall from time to time be assigned to him by
the Board of Directors and which are consistent with the duties
reasonably assigned to the President and Chief Executive Officer of
the type and size of the Company.
(C) Employee shall devote his business time and attention, energy and
skill to the business of Employer.
4. COMPENSATION.
(A) Employer shall pay Employee an annual salary of $232,925 (the "Annual Base
Compensation") with an annual increase in Annual Base compensation,
commencing on the first anniversary date of this Agreement (the
"Anniversary Date") and continuing on the Anniversary Date in each year
thereafter during the term of this Agreement, equal to 10% of the prior
year's Annual Base Compensation, payable in accordance with the Company's
normal policies.
(B) Employee shall be granted participation in the Company's 401(k) Plan,
Performance Incentive plan, stock options, insurance or other plans of the
Corporation which are currently in effect as well as all other benefits
available to any other employee of the Company during the term hereof,
(C) On an annual basis employee shall receive a portion of the 10% pretax Bonus
Plan that the Company has in place for it's executives. Such amount shall
be decided by the Compensation Committee.
(D) Employer shall obtain and thereafter maintain in effect at Employer's
expense the insurance coverage for the benefit of the employee and family
which include, but not be limited to, medical and dental insurance.
Employee shall also receive an annual allowance of $5,000 towards the
payment of premiums of life insurance, and disability insurance, which
insurance may be payable to such beneficiaries as the Employee may direct.
(E) Employer will reimburse Employee or cause him to be reimbursed for all
ordinary and necessary business expenses incurred by him for or on behalf
of Employer in the performance of his duties hereunder. For such purposes
Employee shall submit to Employer periodic reports of such expenses at
least once in each calendar quarter. Employee shall also receive a monthly
allowance of $750 towards the lease cost of an Automobile, and the Company
shall also pay for all maintenance, repairs, insurance and all other costs
and expenses thereof.
(F) Employee shall receive annual vacation of four (4) weeks, holidays, twelve
(12) days sick leave, and six (6) days personal leave in each year without
reduction of his compensation or other benefits hereunder. If Employee does
not use all of such paid vacation during such 12 month period, Employee
shall be entitled to receive payment at such time for any unused vacation
days for such period. The Company shall pay Employee at the rate of his
then current basic salary for any unused vacation at the termination of
this Agreement. Employee shall also be entitled to additional personal days
for all Jewish holidays on which work is prohibited in the Orthodox
tradition.
5. CHANGE IN CONTROL
(A) In the event of a "change of control" of the Company. The Company will
provide the following benefits to the employee:
(i) all outstanding options granted to the Executive under the Stock
Option Plan will automatically become immediately vested and
exercisable in full;
(ii) the executive will receive a lump-sum payment equal to 2.99 times
the average of that Executive's base salary and bonus for the
previous five years;
(iii)the Company will pay the cost to transfer ownership to the
Executive of any automobile provided to the Executive by the
Company or for which the Company pays or reimburses the costs of
leasing or other form of ownership; and
(iv) to the extent that any such payments (alone or with other
compensation payable to the Executive, are subject to an excise
tax under Section 4999 of the Internal Revenue Code, or any
successor provision, the Company will make an additional cash
payment to the Executive such that the executive's net after-tax
compensation is not reduced by such excise tax. Any compensation
payable to Executive contingent on a change of control, and which
qualifies as a "parachute payment" Under Section 280G of the
Internal Revenue Code shall be limited to the maximum amount that
may be paid to Executive without any part of such compensation
being deemed an "excess parachute payment" under that section.
(B) For purposes of this paragraph "change in control" shall mean the
following:
(i) the Executive of a transaction or series of transactions in which
persons or entities other than the present shareholders of the
Company acquire a majority in book value of the assets currently
owned by the Company; or a majority of the shares of the
Company's voting equity stock; or the power to designate a
majority of the Company's Board of Directors; or otherwise
acquire the ability, whether by contract, stock ownership or
otherwise, to control the management and policies of the Company;
(ii) the signing of any agreement for the merger or consolidation of
the Company with another corporation or for the sale of all or
substantially all of the assets of the Company; followed by
termination of the Executive within twelve months.
(iv) upon the occurrence of any other event or series of any other
event or series of events which, in the opinion of the Board of
Directors of the Company, will, or is likely to, if carried out,
result in a change of control of the Company.
6. TERMINATION; RIGHTS OF TERMINATION.
This Agreement may be terminated only as provided in this paragraph 6
(A) (i) A notice of resignation by Executive presented to the Company
other than as contemplated in paragraph 6(A) (iii).
(ii) A notice by the Company to Executive of termination for cause
("Cause"), which means:
(a) Executive's willful and continued failure to perform
substantially his duties (other than any such failure
resulting from Executive's Disability as hereinafter
defined) or any such failure resulting form Executive's
termination for Good Reason (as defined below), after a
written demand for substantial performance is delivered to
Executive by the Board of Directors of the Company which
specifically identifies the manner in which the Board of
Directors believes that Executive has not performed his
duties and the failure of Executive to reasonably comply
with such demand within thirty (30) days of notice to
Executive, or (b) Executive's willful engagement in gross
misconduct materially and demonstrably injurious to the
Company which is not cured by Executive within thirty (30)
days of notice to Executive. For purposes of this
subsection, no act or failure to act on Executive's part
shall be considered "willful" unless it was not in the best
interest of and without a good faith belief that his action
or omission would be in the best interest of the Company.
Executive shall not be terminated for Cause unless and until
there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote or not less
than two-thirds of the entire membership of the Board of
Directors of the Company finding that in the good faith
opinion of the Board of Directors Executive was guilty of
conduct set forth in clauses (a) or
(b) of this subparagraph 6(A) (ii) and specifying the
particulars thereof in detail;
(iii)(a) a notice by the Company to Executive of termination without
cause, (b) termination as a result of Executive's death, (c) a
notice of termination due to Disability given by the Company to
Executive or (d) a notice of termination by Executive to the
Company (i) for Good Reason, or (ii) due to the Company's
material breach of this Agreement that continues during the
thirty (30) days after Executive gives written notice to the
Company of such breach, which notice specifically identifies the
manner in which Executive believes that the Company breached this
Agreement,
(iv) If this Agreement is terminated pursuant to paragraph 6(A) (iii),
the Company shall be obligated to pay to Executive a severance
payment equal to three times the sum of the Executive's annual
Base Salary in effect at the time of termination plus the highest
annual cash bonus (if any) paid by the Company to Executive
during the three-year period preceding the date of termination.
Such severance payment shall be payable in a lump sum payment
within fifteen (15) days of the termination of Executive's
employment. In addition, for the five-year period following
Executive's termination, the Company shall be obligated to
continue to provide Executive with life, health, disability and
accident insurance benefits and all other executive benefits
(including, without limitation, retirement benefits and
automobile and expense allowances) comparable to those provided
to Executive prior to his termination. To the extent Executive is
no longer lawfully eligible for any aforementioned Benefit
because he is no longer employed by the Company, the Company
shall pay to Executive a lump sum cash payment equal to the
present value of the benefits that would have been provided to
Executive had his employment continued for such five-year period.
(v) For purposes of this Agreement, the term "Disability" shall mean
Executive's inability to perform his material duties under this
Agreement because of any illness or physical or mental disability
or other incapacity as evidenced by a written statement of a
physician licensed to practice medicine in any state in the
United States mutually agreed upon by the Company and Executive
which disability or other incapacity continues for a period in
excess of six (6) consecutive months in any consecutive
twelve-month period.
(vi)Upon termination of this Agreement for any reason whatsoever, in
addition to any other rights which Executive may have hereunder,
Executive shall be entitled to receive all of his Base Salary and
a pro-rated portion of his minimum annul bonus under this
Agreement to the date of termination and any unused paid vacation
earned as determined pursuant to paragraph 4(e).
(vii)In the event of termination of this Agreement for any reason
whatsoever, all rights and obligation of the Company and
Executive under this Agreement shall cease immediately, except
for those which by terms specifically apply to periods following
the termination of this Agreement as arise by reason of such
termination, and thereafter Executive shall have no right to
receive any compensation hereunder except, under appropriate
circumstances, as set forth in paragraph 6(A) (iii) and 6(vi)
hereof.)
(C) For the purpose of this paragraph 6, "Good Reason" means any of the
following events unless it occurs with the Executive's express prior
written consent: (i) the assignment to Executive of any duties
inconsistent with, or a diminution of, Executive's position, duties,
titles, offices, responsibilities and status with the Company, or any
removal of Executive or any failure to re-elect Executive to any of
such positions, (ii) a reduction in Executive's Base Salary as in
effect, form time to time, or a failure to increase Executive's Base
Salary as provided in this Agreement; (iii) except with respect to
changes required to maintain its tax-qualified status or changes
generally applicable to all employees of the Company, any failure by
the Company by the Company to continue in effect or make any provision
for any benefit, stock option, annual bonus or contingent loans
arrangements, or other incentive plan or arrangement of any type in
which Executive is participating from time to time, the taking of
which action would adversely affect Executive's participation in or
materially reduce Executive's benefits under any such benefit plan or
arrangement or deprive Executive of any material fringe benefit
enjoyed be Executive from time to time, or the failure to provide
Executive with the number of paid vacation days to which he is
entitled; (v) a relocation of the Company's principal executive
offices or Executive's relocation to any place more than one hundred
(100) miles from the location at which Executive performed his duties
as of the date hereof; or (vi) any failure by the Company to obtain
the assumption of this Agreement by any successor to or assignee or
the Company.
(C) The Company will also transfer ownership of exiting life insurance
policy and beneficiary as per employee's instructions. In addition the
deferred compensation insurance trust will become fully vested, if
applicable, for the Benefit of Employee.
7. CONFIDENTIALITY:
(A) Employee understands and acknowledges that as a result of Employee's
employment with Employer and involvement with the business of
Employer, he shall necessarily become informed of and have access to,
confidential information of Employer including, without limitation,
inventions, trade secrets, technical information, know-how, plans,
specifications, identity of customers and identity of suppliers, and
that such information, even though it may have been or may be
developed or otherwise acquired by Employee, is the exclusive property
of the Employer to be held by Employee in trust and solely for
Employer's benefit and Employee shall not at any time, either during
or subsequent to his employment hereunder, reveal, report, publish,
transfer or otherwise disclose to any person, corporation or other
entity or use any of Employer's confidential information, without its
written consent of the Board of Directors, except for use on behalf of
the Company in connection with its business, and except for such
information which legally and legitimately is or becomes of general
public knowledge from authorized sources other than Employer.
(B) Upon the termination of his employment with Employer for any reason,
Employee shall promptly deliver to it all drawings, manuals, letters,
notes, notebooks, reports and copies thereof and all other materials,
including, without limitation, those of a secret or confidential
nature, relating to Employer's business which are in Employee's
possession or control. Employer shall reimburse employee for any
packing or moving costs reasonably incurred by him in connection with
the foregoing delivery.
8. NON-COMPETITION; RESTRICTIVE COVENANTS AND CONFIDENTIALITY; INJUNCTIVE
RELIEF:
(A) During the term of his employment with Employer pursuant to his
Agreement, or any renewal thereof, Employee shall not, directly or
indirectly whether as principal, agent, shareholder, employee,
officer, director, consultant, joint- venturer, partner or otherwise,
own, manage, operate, join, control or participate in the ownership,
management, operation of, render any services to or be connected in
any manner with any business which is in direct competition with or is
if the type or character of any business engaged in by Employer or
which offers, sells or markets products, projects or services that
directly compete with products or services offered by Employer or any
of its subsidiaries or affiliates, irrespective of whether Employee's
involvement shall be as an office, owner, employee, partner,
joint-venturer, consultant, agent or other participant provided and
from making an investment in any company the securities of which are
listed on a national securities exchange or actively traded in the
over-the-counter market, so long as such investment does not equal or
exceed five percent (5%) of the total number of outstanding shares of
common stock of such company.
(B) For a period of one year after the expiration or termination of his
employment with Employer for any reason, Employee shall not, directly
or indirectly, whether as principal, agent, shareholder, employee,
officer, director, joint-venturer, partner, consultant or otherwise,
render any services to or with any company, firm or individual which
competes in any way with Employer in a business actually engaged in or
being actively developed by it. Under this Agreement, Employer will
have deemed to have been actively developing a business if, with
regard to such proposed business activity, there has been extensive
discussion at Board of Director meetings, formal Board resolutions,
corporate expenditures in excess of $25,000, preparation of marketing
studies or comparable actions related thereto.
(C) For a period of two years following the expiration or termination of
his employment with Employer for any reason, Employee shall not,
directly or indirectly, whether as principal, agent, shareholder,
employee officer, director joint-venturer, partner, consultant or
otherwise, solicit, raid, entice or induce any person who is, or was
at the time of such termination, an Employee of Employer to terminate
his or her employment with the Employer or become employed by any
other person, firm or corporation, and he will not approach any such
employee for such purpose or authorize or knowingly approve the taking
of such action by other persons to become employed in a business who
or which are actively engage in a competitive business.
9. ASSIGNABILITY AND BINDING EFFECT. The rights and obligations arising under
the Agreement shall inure to the benefit of and shall be binding upon the
executors, administrators, successors and legal representatives of Employee
and shall inure to the benefit of and be binding upon Employer, upon its
successors and assigns, but neither this Agreement nor the right or
obligations of Employee hereunder may be assigned, pledged, hypothecated or
otherwise transferred by Employee in whole or in part to another person,
firm or corporation nor may the obligations of Employee hereunder be
delegated.
10. NOTICES. All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered personally or sent by registered
or certified mail, prepaid and return receipt requested, to the other party
hereto at his or its mailing address as set forth at the beginning of this
Agreement, and in the case of Employer with copies to Xxxxxxx X. Xxxxx,
Esq., Scheichet & Xxxxx, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Either party may change the address to which such communications hereunder
shall be sent by sending notice of such change to the other party as herein
provided.
11. REPRESENTATIONS BY EMPLOYER AND EMPLOYEE. Employee hereby represents and
warrants that he is not a party to any other agreement, contract or
understanding, whether of employment or otherwise, which would in any way
restrict or prohibit him form undertaking or performing employment with
Employer in accordance with the terms and conditions of this Agreement.
Employer hereby represents and warrants that this Agreement has been
properly authorized by all necessary corporate action and, when and if,
fully executed, will be binding and enforceable upon the Company in
accordance with its terms except for the application of the laws of
Insolvency and bankruptcy as they may otherwise affect such Agreement.
Employer further represents and warrants that no other contract, agreement,
provision of its certificate of incorporation or bylaws, debt obligations,
law, regulation court or administrative order prevents it form entering
into, or conflicts with, this Agreement.
12. WAIVER. The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach or violation, whether singular in nature or not.
13. PRIOR AGREEMENTS; COMPLETE UNDERSTANDING; AMENDMENT. This Agreement cancels
and supersedes any and all prior agreements and understandings, in any,
between the parties hereto regarding the services of Employee to Employer
and constitutes the complete understanding between the parties with respect
to the Employment of Employee hereunder and no statement, representation,
warranty or covenant has been made be either party with respect thereto
except as expressly set forth herein. Employee acknowledges that he has
been afforded the right to review this Agreement with legal counsel prior
to the execution of this Agreement, and that he has been encouraged to do
so. This Agreement shall not be altered, modified or amended except by
written instrument signed by each of the parties hereto.
14. HEADING. The heading set forth in this Agreement are for convenience only
and shall not be considered as part of this Agreement in any respect nor
shall they. In any way affect the substance of any provisions contained in
this Agreement.
15. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute but one and the same agreement.
16. GOVERNING LAW. CONSTRUCTION WITH EXISTING LAW, SEVERABILITY. This Agreement
shall be governed by, and enforced in accordance with, the internal laws of
the State of New York. It is the intention of the parties hereto that all
terms and conditions of this Agreement are in compliance with the laws and
regulations of the state of New York, and nothing in this Agreement shall
be construed to be in derogation of the laws, rules and regulations
thereof. If for any reason any provision of this Agreement or any part
hereof is invalid, unlawful or incapable of being enforced by reason of any
rule of law, equity or public policy, all conditions and provisions of the
Agreement which can be given effect without such invalid, unlawful or
unenforceable provision shall, nevertheless, remain in full force and
effect, and such invalid, unlawful or irrevocable provision shall be
carried out as nearly as possible according to its original terms and
intent, while eliminating such invalidity or non-enforceability.
IN WITNESS WHEREOF, The parties hereto have executed this Agreement
effective as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
BY: _________________________ BY:__________________________
TITLE: XXXXX XXXXX
