EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of this 1st day of July, 1998 by and between NewCare Health
Corporation, a Nevada corporation, with offices at 0000 Xxxx Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter referred to as the "Company")
and Xxxxxx X. Xxxx, an individual resident of the State of Georgia
(hereinafter referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is, is engaged in the business of owning and
operating (including without limitation, services with respect to accounting,
operations, marketing and management) nursing home facilities, retirement
facilities, assisted living facilities, hospitals, and the provision of
services ancillary to those business (the foregoing business activities are
hereinafter referred to as the "Business") currently throughout the United
States (the "Region"); and
WHEREAS, the Company and the Executive desire to enter into this
Agreement for the Executive to serve as the General Counsel and Chief Legal
Officer of the Company and to set forth herein the respective rights and
responsibilities of each party to the other;
NOW, THEREFORE, in consideration of the mutual benefits arising therefrom
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Employment. The Company agrees to and does hereby employ the
Executive, and the Executive agrees to and hereby does accept employment by
the Company, subject to the terms and conditions set forth herein.
2. Term. The term of this Agreement shall commence effective as of
July 1, 1998 and shall be for an initial term of three years; provided,
however, unless the Company or the Executive shall give notice of non-renewal
at least 60 days prior to the end of any term year, the term shall
automatically extend for an additional year thereby maintaining a term of
three years (the "Term"), unless such Term shall be sooner terminated pursuant
to the terms hereof or extended by mutual agreement of the Company and the
Executive.
3. Duties.
(a) Title and Duties. During the Term of this Agreement, the
Executive shall be employed as the General Counsel and Chief Legal Officer of
the Company and its subsidiaries, and shall be in charge of and responsible
for the general and supervisory duties normally and customarily attendant to
such office in a company engaged in the Business, and shall render such other
related services and exercise such powers, which are from time to time
requested of him, assigned to him or vested in him by the Board of Directors
of the Company (the "Board").
(b) Full Time Employment. The Executive agrees that during the
Term, he will devote substantially his full business time, energies, labor and
skills to the business of the Company and to the duties and responsibilities
specified herein. The Company shall provide the Executive with his own office
space and such secretarial, administrative and clerical support as the
Executive may reasonably require to enable the Executive to execute his duties
and responsibilities.
4. Compensation.
(a) Annual Salary. In consideration for the services performed
under this Agreement, the Company shall pay to the Executive an annual salary
of $275,000 beginning July 1, 1998, $325,000 beginning July 1, 1999 and
$385,000 beginning July 1, 2000. Thereafter, the annual salary shall increase
by 10% each year unless otherwise agreed to by the Company and the Executive.
(b) Stock Options. During each year during the Term, the Company
shall grant to Executive nonqualified stock options from the Company's
employee stock option plan, immediately vested and exercisable, to purchase at
least 125,000 shares of the Company's common stock at an exercise price equal
to the stock price for the Company's common stock quoted on the NASDAQ (or
such other exchange on which the Company's common stock is then traded) at the
close of trading on the trading day immediately preceding the date such
options are granted.
(c) Bonus. During each year during the Term, the Executive shall
participate in any year end or other bonus pool commensurate with bonuses
received by similarly situated executives of the Company.
5. Benefits.
(a) Vacation. The Executive shall be entitled to reasonable paid
vacation, up to four calendar weeks, during each twelve month period of his
employment, at such time or times as the Executive shall determine in his
reasonable discretion, taking into account the needs of the Company and its
business operations.
(b) Reimbursement For Expenses. The Executive may, and is hereby
authorized to, incur reasonable expenses in promoting the Company's business
and conducting his duties under this Agreement, including reasonable travel
and entertainment expenses. The Company shall reimburse the Executive
promptly for all such reasonable expenses upon the presentation by the
Executive of itemized accounts of and receipts for such expenses. The Company
reserves the right to establish an allowance for such expenses, as determined
from time to time by the Board.
(c) Other Benefits. Throughout the Term, the Executive shall be
and remain eligible to participate in any pension, profit-sharing, stock
option, employee incentive programs or other similar plan or program of the
Company now existing or established hereafter for the benefit of its employees
or executives generally, to the extent that he is eligible under the general
provisions thereof. The Executive also shall be entitled to participate in
any group insurance, hospitalization, medical, health, accident, disability or
other similar plan or program of the Company now existing or established
hereafter for the benefit of Company employees or executives generally, to the
extent that he is eligible under the general provisions thereof. In addition,
the Executive shall be entitled to the benefits set forth on Schedule l
attached hereto and incorporated herein by reference.
6. Restrictive Covenants of the Executive.
2
(a) Confidentiality. The Executive acknowledges that his
employment by the Company has heretofore brought him, and will throughout his
employment continue to bring him, into close contact with many confidential
affairs of the Company and its affiliates, including information about
operational methods, and other business affairs, methods and information,
including plans for future development, not readily available to the public.
The Executive further acknowledges that the services to be performed under
this Agreement are of a special, unique, unusual, extraordinary and
intellectual character; that the Company and the Affiliates are engaged in,
and shall continue to be engaged in, business operations throughout the
Region, that its services may be marketed throughout the Region, and that the
Company and the Affiliates compete with other organizations that are or could
be located in nearly any part of the Region. In recognition of the foregoing,
the Executive covenants and agrees that:
(i) he will not, except as necessary in Executive's good faith
business judgment in discharging Executive's duties hereunder, knowingly
divulge any material confidential matters of the Company or the Affiliates
which are not otherwise in the public domain and will not intentionally
disclose them to anyone outside of the Company or the Affiliates during his
employment hereunder or following the expiration or termination of his
employment with the Company for any reason; and
(ii) he will deliver promptly to the Company at the end of the
Term, or at any other time the Company may so request, all memoranda, notes,
records, reports and other documents (and all copies thereof) relating to the
businesses of the Company and/or the Affiliates which he obtained while
employed by, or otherwise serving or acting on behalf of, the Company or any
of the Affiliates, and which he may then possess or have under his control.
(b) Non-Solicitation of Facilities; Non-Interference with Trade
Relationships. The Executive shall not, during the term of his employment by
the Company, directly or indirectly, through any other individual or entity,
solicit, entice, persuade or induce any other individual or entity to
terminate, reduce, change or refrain from renewing or extending its
contractual or prospective contractual or other relationship with the Company
or any affiliates, and the Executive shall not approach or solicit, directly
or indirectly, any health care facility which is managed by the Company or any
affiliates for any of the above purposes or authorize or knowingly cooperate
with the taking of any of the above actions by any other individual or entity.
(c) Severability. The Executive agrees that the covenants and
agreements contained in Sections 8(a) and (b) of this Agreement, are of the
essence of this Agreement; that the Executive has agreed to the agreements set
forth in Section 8(a) and b as an inducement to the Company to employ the
Executive; that each of such covenants is reasonable and necessary to protect
and preserve the interests and properties of the Company and the business of
the Company; that the Company is engaged in the Business in and throughout the
Region; that irreparable loss and damage will be suffered by the Company
should the Executive breach any such covenants and agreements; that each of
such covenants and agreements is separate, distinct and severable not only
from the other of such covenants and agreements but also from the other and
remaining provisions of this Agreement; and that the enforceability of any
such covenant or agreement shall not affect the validity or enforceability of
any other such covenants or agreements or any other provision or provisions of
this Agreement.
3
(d) Injunctive Relief. The Executive agrees that the remedy at law
for any breach or threatened breach of any covenant contained in this
Paragraph 6 will be inadequate and that the Company, in addition to such other
remedies as may be available to it, at law or in equity, shall be entitled to
injunctive relief without bond or other security.
7. Termination.
(a) Notice Periods. Notwithstanding any provisions contained
herein to the contrary, (i) the Executive's employment may be terminated by
the Company upon the Executive's death or disability (as defined below) or for
Cause (as defined below), (ii) the Executive may terminate his employment upon
thirty (30) days' notice to the Company for Good Reason (as defined below) or
upon thirty (30) days' notice to the Company without reason and (iii) the
Executive's employment shall be terminated immediately upon the happening of a
Terminating Event (as defined below).
(b) "Disability". For purposes of this Agreement,
"Disability" shall mean the Executive is mentally or physically disabled from
properly performing his duties and responsibilities hereunder for a period of
one hundred twenty (120) consecutive days or for one hundred eighty (180) days
even though not consecutive, within any one (1) year period, all as determined
by a physician reasonably acceptable to the Executive and the Company in good
faith by the Company's Board of Directors and supported by medical evidence.
(c) "Cause". For purposes of this Agreement, for "Cause" shall
mean: (i) the conviction of the Executive of a felony by a federal or state
court of competent jurisdiction; (ii) any action by the Executive which
constitutes fraud, misappropriation of funds or embezzlement; (iii) a decree
by a court of competent jurisdiction that the Executive is not competent to
manage his own affairs; or (iv) the intentional commission or omission, with
blatant malevolent intent, of an act which jeopardizes the continuing
effectiveness of the Business or of the certificates, licenses or other
authorizations held by the Company and necessary for the conduct of the
Business.
(d) "Good Reason". For purposes of this Agreement, "Good Reason"
shall mean any of the following: (i) the assignment to the Executive of
duties and responsibilities inconsistent with the Executive's positions,
duties, responsibilities, titles or offices described herein; (ii) any
material reduction by the Company of the Executive's duties or
responsibilities (including the appointment, without the Executive's consent,
of an executive officer senior to him with respect to legal matters of the
Company or its affiliates); (iii) any reduction by the Company of the
Executive's compensation and benefits as set forth in Paragraphs 4 and 5
hereof (it being understood that a reduction of benefits to all senior
management personnel of the Company shall not be deemed a reduction of the
Executive's compensation package for the purposes of this section) or (iv)
requiring the Executive to be based at a location not within reasonable
commuting distance of Atlanta, Georgia.
(e) "Terminating Event." For purposes of this Agreement, a
"Terminating Event" shall mean any of the following:
(i) A person (other than a person who is an officer or a
Director of Employer on the effective date hereof), including a "group" as
defined in Section 13 (d) (3) of the Securities Exchange Act of 1934, becomes,
4
or obtains the right to become, the beneficial owner of Employer securities
having 51% or more of the combined voting power of then outstanding securities
of the Employer that may be cast for the election of directors of the
Employer;
(ii) The Board-nominated slate of candidates for the Board is
not elected;
(iii) Employer consummates a merger or similar transaction in
which it is not the surviving entity;
(iv) Substantially all of Employer's assets are sold; or
(v) Employer's stockholders approve the dissolution or
liquidation of Employer.
(f) Death, Disability, or Termination for Cause. In the event
that the Executive's employment hereunder is terminated as a result of death,
disability or for Cause by the Company, or without Good Reason by the
Executive, or in the event that this Agreement is not renewed or extended at
the end of the Term, then the Company shall have no further obligations or
liabilities to the Executive hereunder, such that all benefits and salary
provided for within this Agreement shall terminate simultaneously with the
termination of the Executive's employment except for benefits and salary
earned and accrued through the date of termination. Nothing in this
subparagraph (f) shall supersede any rights of the Executive to receive any
amounts or benefits otherwise due to him upon the occurrence of any of the
events described in the immediately preceding sentence, whether such rights
are created by this Agreement or otherwise. Notwithstanding the foregoing, in
the event that the Executive's employment is terminated due to disability, the
Company shall continue to pay the salary and maintain benefits for Executive
for a period equal to one (1) year from the date on which the Executive first
became unable to perform his duties and responsibilities hereunder as a result
of such disability.
(g) Termination by Employee with Good Reason, by the Company
Without Cause or the Happening of a Terminating Event. In the event of the
Executive's termination by the Company other than for Cause, death or
disability, in the event of termination of the Executive's employment by the
Executive for Good Reason or in the event of a Terminating Event the Company
shall immediately pay to Employee a lump sum amount equal to all the
compensation and benefits which would have been paid during the remaining term
of the Agreement (without reducing such amount to present value).
(h) Termination Notices. Any termination by the company or by the
Executive shall be communicated by written notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for the termination of the
Executive's employment.
8. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Georgia.
5
9. Notices. All notices required or permitted to be given by either
party hereunder, including notice of change of address, shall be given in
writing and delivered by hand, or mailed, postage prepaid, certified or
registered mail, return receipt requested, or by nationally recognized
overnight courier service, to the other party at the addresses set forth on
the first page of this Agreement, or to such other address as may be
designated by either party to the other party hereto. Notices shall be
effective upon delivery, or if delivery is refused, upon tender of delivery.
10. Miscellaneous.
(a) Entire Agreement. (i) This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior oral or written agreements and understanding.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof or in effect among parties. This Agreement may not be
amended, and no provision hereof shall be waived, except by a waiver, by the
party waiving compliance therewith, which states that it is intended to amend
or waive a provision of this Agreement. Any waiver of any rights or failure
to act in a specific instance shall relate only to such instance and shall not
be construed as an agreement to waive any rights or failure to act in any
other instance, whether or not similar.
(ii) The parties hereto agree that, after the execution of
this Agreement, they will make, do, execute or cause or permit to be made,
done or executed all such further and other lawful acts, deeds, things,
devices, conveyances and assurances in law whatsoever as may be required to
carry out the true intention and to give full force and effect to this
Agreement.
(b) Severability. Should any provision of this Agreement be held
by a court of competent jurisdiction to be unenforceable or prohibited by an
applicable law, this Agreement shall be considered divisible as to such
provision, which shall be inoperative, and the remainder of this Agreement
shall be valid and binding as though such provision were not included herein.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the Company and any corporation with which
the Company merges or consolidates or to which the Company sells all or
substantially all of its assets, and upon the Executive and his executors,
administrators, heirs and legal representatives.
(d) Headings. All headings in this Agreement are for convenience
only and are not intended to affect the meaning of any provision hereof.
(e) Counterparts. This Agreement may be executed in two or more
counterparts with the same effect as if the signatures to all such
counterparts were upon the same instrument, and all such counterparts shall
constitute but one instrument.
(f) Good Faith. The parties acknowledge that this Agreement has
been entered into in good faith and that each party will exercise good faith
in the performance of its obligations and enforcement of its rights hereunder.
6
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the day and year first above written.
"EXECUTIVE" "COMPANY"
NewCare Health Corporation
/s/ Xxxxxx X. Xxxx (SEAL)
Xxxxxx X. Xxxx
By: /s/ Xxxxxxx X. Xxxxxx
Its: President
[CORPORATE SEAL]
7
SCHEDULE 1
The Company shall maintain, at its sole expense, a life insurance policy
covering the Executive and providing a death benefit of $2,000,000 and made
payable to a beneficiary designated by the Executive.
The Company shall pay any incremental cost of maintaining dependent
health coverage on the Executive and his dependents.
The Company shall pay the Executive's license fees and societies and
associations dues and expenses.
The Company shall pay the Executive's continuing education fees and
expenses.
AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of the 12th day of April, 1999 by and between NewCare
Health Corporation, a Nevada corporation, with offices at 0000 Xxxx Xxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter referred to as the
"Company") and Xxxxxx X. Xxxx, an individual resident of the State of Georgia
(hereinafter referred to as the "Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive entered into that certain
Executive Employment Agreement dated as of July 1, 1998 (the "Employment
Agreement"); and
WHEREAS, as a result of financial hardships currently existing in the
long term healthcare industry, the Board of Directors of the Company has
requested that the Company and the Executive enter into this Agreement to
amend certain of the terms of the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual benefits arising therefrom
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Notwithstanding anything to the contrary contained in Paragraph 4(a)
of the Employment Agreement, Executive's annual salary shall not be changed
(increased or decreased) until such time as the Company and the Executive have
agreed to a methodology for annual increases acceptable to the Executive and
the Board of Directors of the Company.
2. Notwithstanding anything to the contrary contained in Paragraph 4(b)
of the Employment Agreement, Executive shall not be granted options to
purchase common stock of the Company pursuant to the Employment Agreement
until such time as the Company and the Executive have agreed to a methodology
for the granting of such options acceptable to the Executive and the Board of
Directors of the Company; provided, however, nothing herein is intended to
limit the right of the Board of Directors of the Company to grant options to
Executive outside the terms of the Employment Agreement.
3. Except as specifically amended herein, the Employment Agreement shall
remain in full force and effect.
4. This Agreement shall be construed in accordance with and governed by
the laws of the State of Georgia.
5. Miscellaneous.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes any and all
prior oral or written agreements (other than the Employment Agreements) and
understanding. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof or in effect among parties. This
Agreement may not be amended, and no provision hereof shall be waived, except
by a waiver, by the party waiving compliance therewith, which states that it
is intended to amend or waive a provision of this Agreement. Any waiver of
any rights or failure to act in a specific instance shall relate only to such
instance and shall not be construed as an agreement to waive any rights or
failure to act in any other instance, whether or not similar.
(b) This Agreement may be executed in two or more counterparts with
the same effect as if the signatures to all such counterparts were upon the
same instrument, and all such counterparts shall constitute but one
instrument.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the day and year first above written.
"EXECUTIVE" "COMPANY"
/s/ Xxxxxx X. Xxxx (SEAL) By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxx Its: President
[CORPORATE SEAL]
